The Nikkei index at the Tokyo Stock Exchange added 116.78 points to 8,453.26 by noon. The Topix index of all first section shares rose 0.9 percent or 6.48 points to 724.97.
Traders took a lead from Wall Street after figures showed new US home starts jumping 9.3 percent in November to the best level since April 2010, when since-expired tax credits were driving sales. The news suggested a turnaround in the US housing industry.
"The housing sector data are quite important, which followed some good developments coming out of Europe," Kenichi Hirano, operating officer at Tachibana Securities, said.
European markets were boosted by encouraging signs for the eurozone economy after two leading indicators in Germany showed surprisingly bright sentiment while Spain pulled off another successful bond auction.
Greece, meanwhile, said it was near a crucial deal with private banks to write down a chunk of its foreign debt that is expected to save Athens more than 100 billion euros ($130 billion) in financing costs.
But Yoshihiro Okumura, general manager at Chibagin Asset Management, was more sceptical.
"(Although) Europe's risk somewhat eased, still, nothing really has changed at the root of the problem," Okumura told Dow Jones Newswires.
On the forex market, the euro stood at $1.3117, slightly down from $1.3131 in New York Tuesday, and at 102.06 yen, up from 101.88 yen in New York.
The dollar was at 77.80 yen, slightly lower from 77.89.