Tokyo's Nikkei average closed two per cent higher today as investors picked up blue-chip issues including Sony Corp after the US Dow Jones average snapped a seven-day skid.
The dollar recovered ground on the yen, stabilising above 116 yen, another factor encouraging buying, traders said.
A strong yen eats into exporters' overseas profits in yen terms and makes exports more expensive, threatening to choke off Japan's fragile export-led economic recovery.
The benchmark Nikkei average finished 202.24 points or 1.96 per cent higher at 10,498.26, adding to the previous day's 0.44 per cent gain. The capital-weighted TOPIX index put on 2.23 per cent to 1,010.12.
Sony, the world's biggest consumer electronics maker, bounced 4.32 per cent to 5,800 yen after tumbling to an eight-month low the day before when the market reacted to a media report suggesting it may have overstated profits last business year.
After the close yesterday, Sony vehemently denied the report and declared that its accounting was sound.
Talk of yet another accounting scandal swirled in the market as the Washington Postreported in its online edition today that America Online Inc boosted its revenue figures through "unconventional deals" from 2000 to 2002. But investors shrugged this off.