Share prices closed higher after a sharp institution-driven rebound on Wall Street, dealers said.
The recent decline in the yen against the dollar also aided sentiment towards equities, triggering short-covering among exporters, they said.
The Nikkei 225 index closed up 337.05 points or 3.49 per cent at 10,003.72, off a high of 10,013.99. Volume was estimated at 687 million shares.
The Topix index was up 23.05 points at 974.96, and the Nikkei 300 index was up 4.81 points at 191.50. Gainers led decliners 1,035 to 352, with 92 unchanged.
The Nikkei September contract was up 230 points 9,970 on the Osaka Securities Exchange and at 9,975 on the SGX. As a result, the Nikkei 225 index failed to make clear headway above the 10,000 point level, dealers said.
In addition, uncertainty over the trend of the yen also capped the market's upside, they said.
The market also remained top-heavy on caution over the ongoing reporting season both in the US and in Japan, dealers said.
PA