Tokyo stocks were higher Monday morning as bargain-hunting erased earlier losses resulting from weaker-than-expected results from the Bank of Japan's Tankan business survey.
The 225-issue Nikkei Stock Average rose 174.33 points, or 0.67 percent, from Friday to 26,111.54. The broader Topix index was up 4.77 points, or 0.26 percent, at 1,840.71.
On the top-tier Prime Market, gainers were led by marine transportation, transportation equipment and machinery issues.
The U.S. dollar held firm in the upper 144 yen range as U.S. economic data released Friday showed stronger-than-expected inflation in August, fueling the view that the Federal Reserve will continue raising interest rates aggressively to tame inflation, dealers said.
But the unit did not test the 145 yen zone amid market wariness over yen-buying intervention by Japanese monetary authorities, dealers said.
At noon, the dollar fetched 144.80-82 yen compared with 144.70-80 yen in New York and 144.31-33 yen in Tokyo at 5 p.m. Friday.
The euro was quoted at $0.9812-9813 and 142.08-11 yen against $0.9795-9805 and 141.92-142.02 yen in New York and $0.9832-9834 and 141.89-93 yen in Tokyo late Friday afternoon.
Stocks opened lower after the BOJ's Tankan business survey, released shortly before the market opening, showed sentiment among major Japanese manufacturers unexpectedly worsened in September for the third straight quarter.
The quarterly survey also said sentiment among large nonmanufacturers is likely to drop over the coming months, hurting investor sentiment, analysts said.
"A weak outlook among nonmanufacturers showed they do not see a recovery in inbound tourism taking place as quickly as expected earlier, weighing on related issues such as retail," said Yutaka Miura, senior technical analyst at Mizuho Securities Co.
But stocks later reversed course and ended the morning session higher as investors scooped up companies that have seen share price underperformance lately, supported by hopes that Wall Street may rebound later in the day after U.S. futures halted their decline, brokers said.
Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co. pointed to a possibility of pension funds buying issues across various sectors, with the Nikkei index trading below the 26,000 mark earlier in the day.
Among Prime Market issues, declining issues outnumbered advancers 1,050 to 722, while 59 ended the morning unchanged.
Among retail issues, Isetan Mitsukoshi Holdings slid 36 yen, or 2.9 percent, to 1,191 yen and J. Front Retailing shed 29 yen, or 2.5 percent, to 1,147 yen.
Automakers rebounded after losses Friday, with Toyota Motor gaining 43 yen, or 2.3 percent, to 1,919 yen, and Subaru climbing 43 yen, or 2 percent, to 2,210 yen.
