TOKYO stocks opened 1.37 per cent higher on Monday as the president of Cyprus indicated apparent progress in negotiations on a crucial bailout for the island to avert the collapse of its banking system.
The Nikkei 225 index at the Tokyo Stock Exchange was up 169.08 points to 12,507.61 at the start.
Bargain-hunting emerged from the outset following a sizeable decline in Japanese shares on Friday, while market participants were encouraged by a rebound in US stocks and the prospect of a deal on the Cyprus bailout.
The Dow Jones Industrial Average finished up 90.54 points (0.63 per cent) at 14,512.03 on Friday as the rebound followed market losses on Thursday due to some weak earnings reports and uncertainty about Cyprus.
"The foreign investor base, which is key for Japan stocks, remains resilient, as the government's promises for a more stock-friendly Bank of Japan have materialised as advertised," said Hiroichi Nishi, general manager of equities at SMBC Nikko Securities.
"The Cyprus banking problem is a point of focus, but has yet to seriously derail the current equity rallies in the United States and here in Japan," Nishi told Dow Jones Newswires.
Talks with Eurogroup partners on conditions for resurrecting a Cyprus bailout to avert a looming banking system meltdown finally got under way after a delay of four hours on Sunday.
The euro jumped after the negotiations in Brussels appeared to be bearing fruit early on Monday, according to a tweet from Cypriot President Nicos Anastasiades.
"Efforts have culminated," read a translation from the Greek, with EU sources subsequently stating that a preliminary agreement was in place to hit Bank of Cyprus depositors with a massive 40 per cent "haircut" on deposits of more than 100,000 euros pending endorsement by Eurogroup finance ministers.
The euro changed hands at $1.3023 and 123.61 yen in early Asian trade on Monday, up from $1.2986 and 122.72 yen late Friday in New York.
The US dollar rose to 94.92 yen in Tokyo from 94.46 yen in New York.
