Tokyo's Nikkei share average reversed losses to end higher as the market took the defeat of a key government bill and likely general election in its stride.
The Nikkei ended up 0.11 per cent or 12.5 points at 11,778.98. It recovered 1.27 per cent from a low of 11,630.75 struck soon after the rejection of the postal bills. The broader TOPIX index was up 0.23 per cent at 1,191.90.
Analysts said the spectre of political confusion in the world's second-biggest economy had largely been factored into share prices in the past few sessions, and the market has moved its focus to the strength of the economy ahead of key data due later this week.
Japan is set to release machinery orders figures for June tomorrow, followed by gross domestic product numbers for April-June on Friday.
Japanese Prime Minister Junichiro Koizumi is expected to call an election for September 11th, after parliament's upper house rejected bills to privatise the postal system - the core of the prime minister's reforms.