Tokyo's headline Nikkei index briefly rose above the 10,000 level on Monday after positive US manufacturing data gave investors a more optimistic snapshot of the world's largest economy, brokers said.
The Nikkei-225 index eased off intraday highs at the Tokyo Stock Exchange to close up 97.02 points, or 0.98 percent to 9,965.09. The Topix index of all
first-section issues added 1.20 percent, or 10.25 points, to 864.11.
Markets in the United States received a boost from the release of the ISM purchasing managers index for the manufacturing sector for June, which climbed 1.8 percent from May, much better than economists had forecast.
"Sentiment has not turned immediately bullish, but it seems the recent US slowdown was a result of temporary factors such as disruptions in Japan's supply chain and higher gasoline prices," Cosmo Securities strategist Toshikazu Horiuchi told Dow Jones Newswires.
Progress in tackling Greece's debt also supported the market after eurozone finance ministers cleared the way Saturday for Athens to receive urgent funds to avoid imminent bankruptcy, brokers said.
Greece is expected to receive 12 billion euros from the eurozone and IMF by July 15 after the ministers approved the fifth tranche of aid from last year's
110-billion-euro ($160 billion) financial rescue package.
US stocks jumped sharply higher on Friday, closing out the best week in two years and starting the second half on a positive note.
In thin trade before the long July 4 holiday weekend, the Dow Jones Industrial Average leaped 168.43 points (1.36 percent) to 12,582.77.
Trading volume was also light in the Tokyo market with US markets closed Monday for Independence Day, said Kazuhiro Takahashi, general manager of investment strategy and research at Daiwa Securities.
Toyota climbed 1.49 percent to 3,385 yen, and Honda surged 3.53 percent to 3,220 yen.
Banks also posted robust gains, with Mitsubishi UFJ Financial Group up 2.76 percent at 409 yen and Mizuho Financial 3.0 percent higher at 137 yen.
Tokyo Electric Power surged 20 percent to 393 yen, lifted by short-term speculators after Chief Cabinet Secretary Yukio Edano said he was not aware of an alleged series of secret meetings between government officials and the utility's chairman.
The Mainichi Shimbun reported Sunday that they had secretly discussed the breakup of the company and the nationalisation of its nuclear power business.