Japan's Nikkei share average extended the previous day's gains on Thursday after a strong rebound on Wall Street and continued calm in Chinese markets eased investors' fears of a prolonged global market rout.
Expectations that the U.S. Federal Reserve might not raise interest rates next month also aided sentiment.
The Nikkei rose 1.1 per cent to 18,574.44, recouping some of the huge losses it suffered in the six-day losing streak that lasted through Tuesday. "The panic is starting to subside, so, instead of being intensely focused on China, people are starting to look more broadly at the international picture," said Nicholas Smith, a strategist at CLSA.
"And, the rest of the developed world seems to be chugging along reasonably well outside of some problems in commodities nations and emerging markets. North America and Europe are doing just fine and that's what really drives things as far as Japan is concerned - the shopping malls of rich nations."
Market participants said intense international focus may overshadow Friday's release of data on Japan's domestic unemployment, retail sales and household spending. "I think Friday's domestic numbers will have a far less significant effect on the market in Japan than foreign investor perception of Japanese companies," said Martin King, co-managing director of Tyton Capital Advisers in Tokyo.
Defensive food shares surged. Ajinomoto Co soared 4.2 per cent and Kikkoman Corp jumped 6.1 per cent.
Banks also were in demand, with Mitsubishi UFJ Financial Group rising 2.3 percent, Sumitomo Mitsui Financial Group gaining 2.6 per cent and Mizuho Financial Group gaining 2.2 per cent.
Major exporters rose, with Toyota Motor Corp edging up 1.5 per cent and Advantest Corp surging 3.6 per cent.
Japan's steel sector fell after Daiwa Securities cut the sector rating to neutral from positive based on faltering demand for steel products in China. Nippon Steel and Sumitomo Metal shares fell 0.7 per cent after its rating was cut to 'hold' from 'buy' and JFE Holdings dropped 2.5 per cent after its rating was changed to 'hold' from 'outperform.'
Market players said the gains were encouraging but the Nikkei index was unlikely to return anytime soon to levels seen as recently as Aug. 10, when it closed at 20,808.69.
The broader Topix gained 1.5 per cent to 1,500.41 and the JPX-Nikkei Index 400 rose 1.4 per cent to 13,504.86.