TOKYO: Tokyo stocks ended higher on Tuesday, extending rallies on Wall Street, where the dollar retreated and markets began to look beyond the US midterm elections.

The benchmark Nikkei 225 index was up 1.25 percent, or 344.47 points, to end at 27,872.11, while the broader Topix index rose 1.21 percent, or 23.47 points, to 1,957.56.

The dollar fetched 146.66 yen, against 146.68 yen in New York late Monday.

US stocks rose overnight for a second straight session ahead of the midterm elections.

“The democratic lock on Congress is likely coming to an end.

A divided government means we won’t be seeing a big fiscal stimulus response next year when the economy is in a recession,“ Edward Moya, senior market analyst at OANDA, said.

In Japan too, hopes ran high among investors for the outcome of the US elections.

Japan’s Nikkei closes flat ahead of Fed outcome; Sony jumps

The prospect of a divided Congress – where Republicans take control of the House – points to a more austere fiscal policy, “which was seen (by investors in Japan) as potentially helping curb inflation”, Daiwa Securities said in a commentary.

Among major shares in Tokyo, SoftBank surged 4.96 percent to 6,929 yen, Sony Group spiked 3.27 percent to 11,200 yen and Toyota was up 0.50 percent to 2,003 yen.

Uniqlo operator Fast Retailing lost 0.40 percent to 83,500 yen.