Japan's Nikkei average rose 1.8 per cent today as Sony and other electronics firms took heart from an economic stimulus plan likely to promote the use of eco-friendly home appliances.
Automakers and solar power-related firms gained after a draft of the ruling Liberal Democratic Party stimulus plan showed it will feature bigger than expected spending of 15.4 trillion yen ($154 billion) and contain measures to encourage the use of solar panels and fuel-efficient cars.
An additional boost came from stronger than expected machinery orders, a volatile figure seen as a leading indicator of corporate spending.
Analysts said the market was responding mainly to details of the economic plan, such as subsidies for fuel-efficient cars, rather than the total proposed amount of spending, which is 3.1 per cent of GDP.
"The numbers themselves are largely factored in and not having that much of an impact, but it's the concrete details that really matter," said Masayoshi Okamoto, head of dealing at Jujiya Securities.
"Things like emphasis on eco-cars will help boost the shares of companies affected. But the market has factored in large amounts of money."
In still more good news for the Nikkei, foreign investors - one of the key drivers of the Japanese market - were net buyers of equities last week to the tune of 44.7 billion yen ($448 million), finance ministry data showed.
Hopes that the economic plan would lead to increased consumer spending dovetailed with sentiment from the United States, where Wall Street gained on hopes that a recovery in business spending will boost tech profits, while other US indices gained after Bed Bath & Beyond reported better-than-expected profits, hinting at a revival in consumer spending.
In a sign of improving sentiment, the CBOE Volatility Index - the so-called "fear index" - closed at its lowest level since early January.
"If there is the kind of proposed subsidy we're hearing about, this could have quite an impact on consumer buying and is inviting a positive response from investors," said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.
The benchmark Nikkei gained 158.38 points to 8,753.39 by the end of morning trade, on track to snap a two-day fall. The broader Topix rose 1.6 per cent to 827.67.
Among steps in the draft stimulus plan was one to help promote digital TV, giving Sony shares an additional boost that helped them climb 4.6 per cent to 2,405 yen.
Other big gainers were Panasonic Corp, which rose 2.2 percent to 1,253 yen and Toshiba, climbing 2.7 per cent to 306 yen. Hitachi rose 4.1 per cent to 308 yen.
Reuters