TOKYO: Tokyo shares closed up more than 1.3 percent on Tuesday as investors' risk-on sentiment was buoyed by gains on Wall Street during the traditional post-Christmas "Santa Claus rally".

The benchmark Nikkei 225 index rose 1.37 percent, or 392.70 points, to 29,069.16, while the broader Topix index also advanced 1.37 percent, or 27.12 points, to 2,005.02.

Shares stayed strong throughout the session, trailing rallies in the United States, where stocks usually drift higher towards the year-end -- a period of low trading volume and light news.

On Wall Street, the S&P 500 ended at a second consecutive record on Monday. The Dow Jones Industrial Average climbed 1.0 percent while the tech-rich Nasdaq Composite Index jumped 1.4 percent.

"Investors were comfortably buying back shares after watching US rallies," said Yoshihiro Okumura of Chibagin Asset Management.

"Although investors are concerned about Omicron, they are also expecting an economic recovery next year," Okumura told AFP.

The dollar fetched 114.84 yen, down from 114.88 yen in New York on Monday.

Before the opening bell, the Japanese government said factory output in November rose 7.2 percent from the previous month and the jobless rate was 2.8 percent, inching up 0.1 percentage point from the previous month.

SoftBank Group gained 0.72 percent to 5,258 yen, recovering from the previous day's decline triggered by news reports that Credit Suisse has launched legal action to recover funds the bank says the Japanese conglomerate owes.

Sony rallied 2.29 percent to 14,695 yen on foreign buying, while chip-making equipment manufacturer Tokyo Electron jumped 1.81 percent to 66,790 yen on strong demand for semiconductors.