Japan's Nikkei rallied to a one-week high on Monday morning after the dollar recovered against the yen, lifting recently battered exporters and financial stocks which had stumbled amid the simmering tensions on the Korean peninsula.
The Nikkei share average rose 1.5 per cent to 19,560.40 in midmorning trade, after hitting a high of 19,567.03, its best level since Sept. 4.
The United States and its allies had been bracing for another long-range missile launch in time for the 69th anniversary of North Korea's founding on Saturday, but the weekend passed without any missile launches.
The dollar added 0.5 per cent to 108.38 yen, moving away from a 10-month nadir of 107.32 yen touched on Friday. “There were fears about Japanese companies' earnings when the dollar dropped below 108 yen,” said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management.
Most Japanese companies expect the pair to trade between 108-110 yen this fiscal year.
Automakers, technology stocks and electronics parts makers surged, with Toyota Motor Corp rising 1.3 per cent, Honda Motor Co soaring 2.0 per cent, Hitachi Ltd adding 1.4 per cent and Murata Manufacturing Co surging 2.8 per cent.
Financial stocks were also higher, with Nomura Holdings rising 2.1 per cent, Daiwa Securities Group gaining 1.7 per cent and Mitsubishi UFJ Financial Group advancing 1.8 per cent.
The pharmaceutical sector rose 1.9 per cent and was one of the best performers on the board with Ono Pharmaceutical Co jumping 4.2 per cent after the health ministry said that a group in the ministry decided that the use of Ono's Opdivo to treat stomach cancer is ready to be officially announced.
The broader Topix gained 1.4 per cent to 1,615.18.