Tokyo stocks finished higher Monday as upbeat sentiment about Japan's economy carried over from strong data released last week, although the yen's rise against the U.S. dollar capped the market's gains.
The benchmark Nikkei Stock Average of 225 selected issues gained 48.71 points, or 0.43 percent, to close at 11,519.82 at the end of morning trading. On Friday, the index rose 80.17 points, or 0.71 percent.
The dollar bought 102.06 yen at 5 p.m. (0800 GMT) Monday, down 0.92 yen from late Friday but above the 101.95 yen it bought in New York later that day. The currency traded between 101.87 yen and 102.20 yen in Tokyo.
Stock prices rose as investors snapped up issues related to domestic economy, such as construction and banks, buoyed by Friday's release of strong November machinery orders data -- regarded as a leading indicator of corporate capital spending several months ahead.
"The stock market is likely to remain solid through this week due to strong sentiment and high trading volume," said Yoshinori Nagano, strategist at Daiwa Asset Management.
Construction giants Kajima Corp. and Maeda Corp. rose, as did selected telecoms, including KDDI Corp.
Higher technology issues Advantest Corp., Kyocera Corp. and Toshiba Corp. also advanced, taking a cue from their U.S. counterparts gains on Friday.
Other major exporters, however, were hurt by the yen's rise, which cuts into the value of their overseas profits.
Toyota Motor Corp., Sony Corp., Bridgestone Corp. and Canon Inc. declined after the dollar fell to a five-year low of 101.81 yen in New York Friday.
U.S. stocks advanced Friday, buoyed by a larger-than-expected drop in wholesale prices.
The Dow Jones industrial average rose 52.17, or 0.5 percent, to 10,558.00. The technology-dominated Nasdaq composite index climbed 17.35, or 0.84 percent, to 2,087.91.
In Tokyo, the broader TOPIX, or the index of all issues on the Tokyo Stock Exchange's first section, added 6.20 points, or 0.54 percent, to finish Monday's trading at 1,151.89 points. The TOPIX gained 5.65 points, or 0.50 percent, Friday.
Volume on the first section was estimated at 1.753 billion shares, down from 1.845 billion shares Friday. Gainers outnumbered losers 1063 to 396, while 136 issues ended unchanged from Friday.
In currencies, the dollar remained weaker against the yen after sliding in New York on Friday as senior officials from the Group of Seven industrialized nations talked about the need for Asian currencies to take more of the burden of dollar weakness ahead of their planned Feb. 4-5 meeting.
The euro up to US$1.3122 late Monday in Tokyo from US$1.3117 late Friday. The euro weakened substantially against the Japanese currency to 133.56 yen from 135.06 yen.
The yield on Japan's benchmark 10-year government bond rose to 1.3900 percent from 1.3800 percent Friday. Its price fell 0.09 to 100.08 points.