Tokyo - Tokyo shares rose on Tuesday morning as banks rallied and a weaker yen lifted exporters, including auto giants Toyota and Nissan.
The dollar rose against the yen as upbeat US manufacturing data boosted bets that the world's largest economy was strong enough to absorb an interest rate hike.
In Asian trading, the greenback fetched ¥102.22 against ¥101.63 in New York on Monday.
A weaker yen boosts the profitability of Japan's exporting firms by making their goods cheaper.
"Overall, the US economy appears to be on a growth track," Mitsuo Shimizu, deputy general manager at Japan Asia Securities Group, told Bloomberg News.
"As some had been expecting a deterioration in the manufacturing figures, alleviation of such worries will help Japanese shares rise."
Tokyo's benchmark Nikkei 225 index climbed 145.93 points, to 16 744.60 by the lunch break, while the Topix index of all first section shares was up 8.91 points, at 1 339.63.
US factory activity expanded in September, the Institute for Supply Management said on Monday, after showing contraction the month before.
The news comes days ahead of the release of a closely watched jobs report.
In Tokyo trading, Toyota shares jumped 2.02% to ¥5 908 with Nissan gaining 0.98% to ¥992.7.
Financial stocks also rose as fears over Deutsche Bank's future continued to ease after a source said it was nearing a deal to slash a multi-billion-dollar US fine.
Mizuho Financial climbed 2.31% to ¥172.6 while Mitsubishi UFJ advanced 2.44% to ¥519.6.
Hitachi Construction Machinery rose 1.14% to ¥2 034 after the world's biggest maker of giant excavators said Monday it was offering Aus$689m ($529m) to buy Australia's Bradken.
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