The benchmark Nikkei 225 index rose 1.63 percent or 347.50 points to 21,623.42 in early trade while the broader Topix index was up 1.60 percent or 24.79 points at 1,575.93.

At a hotly anticipated meeting on the sidelines of the G20 summit, US President Donald Trump and Chinese counterpart Xi Jinping struck a trade war truce on Saturday.

Washington vowed to hold off on further tariffs and declared negotiations with China "back on track".

The dollar rose against the yen in a favourable development for Japanese exporters, changing hands at 108.35 yen against 107.82 yen in New York Friday afternoon.

Overall, there has been a "mild positive reaction" in markets to the US-China truce, said Tapas Strickland, director of economics and markets at National Bank of Australia.

"Consequently although a worst-case outcome has been averted, the threat of tariffs remains and it is unlikely the truce gives much confidence to firms' investment and hiring decisions," he said in a commentary.

The central Bank of Japan released a business sentiment survey just before the opening bell, with the headline index among major manufacturers falling in the second quarter to June.

But Seiichi Suzuki, senior market analyst at Tokai Tokyo Research Centre, noted the survey had been taken before the weekend news.

The US-China truce accord "showed things won't follow the much-feared, worse-case scenario," he said.

"If the survey was taken today or tomorrow, the outcome would be different," he told AFP.

Industry robot maker Fanuc climbed 1.55 percent to 20,240 yen, and Toyota Motor gained 0.67 percent to 6,733 yen.

Nintendo rose 1.51 percent to 40,090 yen.