TOKYO: Japan's Nikkei rose on Tuesday, helped by a rebound in shares of Daikin Industries, Uniqlo-maker Fast Retailing and SoftBank Group after steep declines in the previous session.

The Nikkei share average was up 0.5% at 28,725.81 by the midday break, while the broader Topix was also 0.5% higher at 1,959.34.

Daikin rallied 3.7%, with Fast Retailing adding 0.8% and SoftBank advancing 1.4%. These three stocks contributed some three-quarters of the total gain for the Nikkei because of their weightings.

On Monday, the Nikkei had slid 0.6% even as most other shares in Asia climbed, after a weekend spike in COVID-19 infections in Tokyo just weeks before the city hosts the Olympics.

Japan's government looks likely to decide on Thursday to extend a state of quasi-emergency in Tokyo and three nearby prefectures beyond an original end-date of July 11.

"It looks like there is some buying back of shares after yesterday's sell-off," said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.

But even so, sentiment remains cautious, he said.

"There will soon be a big influx of athletes and media from around the world for the Olympics, and investors worry there could be a spike in infections, which is capping any rise in Japanese stocks."

Hitachi Zozen was the biggest percentage gainer on the Nikkei, rising 4.5%; while the biggest loser was Mitsubishi Motors, which suffered a 3.1% decline.

Among sectors, air transport gained the most on the Topix, adding 3%. Mining was next, up 2.9%, followed by oil and coal producers, which rose 2.7%.

Pharma companies fell the most, down 0.4%, with securities firms down 0.3%, followed by a 0.2% decline for shippers.