The Nikkei share average rose 2.31 per cent as investors returned after sharp falls and an unprecedented early market closure the previous day.
The Nikkei gained 355.10 points to 15,696.28, its biggest one-day percentage gain since October 2005. It had fallen for the last three sessions, tumbling nearly 7 per cent and wiping out more than $300 billion in shareholder value. The broader TOPIX index rose 2.90 per cent to 1,620.29.
Internet conglomerate Softbank jumped 15 per cent to 3,840 yen, after having fallen a total of 22.7 per cent in the previous two sessions to its lowest close since December 8th.
The stock was caught up in the selling sparked by the Livedoor investigation. Livedoor ended at 416 yen, down by its daily limit of 16 per cent from yesterday. The stock is down 40 per cent from its 696 yen closing level on Monday just before the investigation became public.
Local media reports have said Livedoor could be delisted as a result of the investigation, but the Tokyo Stock Exchange denied it was considering such action.
Trade activity fell from the previous session, with 2.46 billion shares changing hands on the Tokyo exchange's first section, but that was still well above last year's daily average of 2.07 billion shares.