Advantest Corp. led gains in computer-related shares after the Nasdaq Composite Index's biggest advance in two months.
The Nikkei 225 Stock Average jumped 129.27, or 1.2 percent, to 10,903.53 at the 3 p.m. close in Tokyo. The Topix index added 12.60, or 1.2 percent, to 1107.48. The measure that tracks glass and ceramics makers, including Asahi Glass, was the best performer among the 33 subgroups that make up the Topix.
The Nikkei has gained 2 percent since Monday, while the Topix has added 2.1 percent. Both benchmarks slid to their three- month lows on Monday after a government report on Aug. 13 showed that Japan's economy grew less than half the pace economists had expected in the second quarter. A U.S. government report earlier this month showing job creation unexpectedly slowed amid concerns of record-high oil prices has also weighed on stocks.
Economists boosted forecasts for Japan's growth to 3.6 percent for the year that started April 1 from 3.2 percent in a Bloomberg News survey conducted after the latest GDP report.
``The surprising Japanese second-quarter GDP and July U.S. payroll figures may have bolstered the bears' arguments temporarily,'' said Kirby Daley, a strategist at Societe Generale Securities' Fimat division in Tokyo. ``But the bottom line is that Japan is still on a steady recovery track domestically.''
Some 975 billion yen ($8.9 billion) of shares included in the Topix traded, falling short of the daily average for the past three months by 13 percent. Four stocks gained for every one that fell on the Tokyo Stock Exchange's first section.
Asahi Glass, Japan's largest glassmaker, advanced 36 yen, or 3.8 percent, to 995. The company late yesterday raised its net income forecast 7 percent for the business year ending Dec. 31. Increased demand for glass parts used in liquid crystal displays and plasma displays contributed to the forecast, the company said.
Other glass-parts makers also gained. Nippon Electric Glass Co., a NEC Corp. glassmaker affiliate, jumped 100 yen, or 4.4 percent, to 2,400.
NGK Insulators Ltd., Japan's biggest maker of electrical insulators, climbed 39 yen, or 4.7 percent, to 873. Shinya Yamada, an analyst at Deutsche Bank AG, raised his 12-month price estimate for the stock to 1,300 yen from 1,190 yen.
Nippon Mining, the country's largest copper smelter, added 11 yen, or 2.3 percent, to 489. The company after the market closed yesterday raised its first-half profit forecast by 60 percent, citing higher prices for crude oil and copper.
Don Quijote Co. Ltd., a discount retailer whose sales tripled in the past five years, jumped 300 yen, or 4.8 percent, to 6,570. The company forecast net income to rise about a fifth to 8.1 billion yen this year.
`First Positive News'
Daiei surged by the daily exchange-imposed limit of 50 yen to 235. That's 27 percent higher from yesterday.
Wal-Mart hired Goldman Sachs Group Inc. and Dresdner Kleinwort Wasserstein to review investment opportunities after Daiei said it's pursuing restructuring alternatives, Wal-Mart said in an e-mailed statement.
Daiei, which had almost 1.1 trillion yen of debt in February, has to agree with its main lenders including UFJ Holdings Inc. on a new restructuring plan by early September, President Kunio Takagi said earlier this month.
Ito-Yokado Co., another general merchandise chain, also is seeking to help Daiei provided the government's bailout agency is involved in the process, the Nihon Keizai newspaper said. Shares of Ito-Yokado added 110 yen, or 2.9 percent, to 3,880.
``This is the first positive news I have seen in the Daiei saga that I can remember,'' said Societe Generale's Daley. ``I would expect after this announcement we will see other interested parties appear, not necessarily all retail-focused, but some looking to take an equity stake in return for financial assistance. Wal-Mart's possible involvement makes it look much more attractive.''
Advantest, the world's biggest maker of equipment used to test computer memory chips, climbed 260 yen, or 3.8 percent, to 7,060. Toshiba Corp., the world's fifth-largest chipmaker, jumped 16 yen, or 4.1 percent, to 404.
Shares of U.S. technology companies gained after a earnings forecast from Network Appliance Inc., a maker of devices that store and distribute data on corporate computer networks, bolstered optimism for growth in the global industry. The Nasdaq, which gets about 40 percent of its value from computer-related companies, jumped 2 percent, the biggest advance since June 7.
``Gains in U.S. technology stocks suggest that a global slump in their shares may be coming to an end,'' said Keiji Numata, a general manager at Tokyo-based Toyo Securities Co.'s investment information department.
Nikkei 225 futures for September delivery rose 1.5 percent to 10,890 in Osaka and added 1.4 percent to 10,885 in Singapore.