Japan's Nikkei average rose 1.1 per cent on Thursday, moving further away from a

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16-month low touched the previous day, after U.S. and Chinese manufacturing data eased investor worries about the global economy. After sliding 7.5 per cent in August, market players said the Nikkei is steadying somewhat, likely helped by buying from domestic institutional investors at lows and buying of futures by foreigners.

A manufacturing rebound in China and stronger-than-expected growth in Australia, help halt the yen's advance and lifted the Tokyo market. Global stocks later also drew support after the Institute for Supply Management said its index of US factory activity rose to 56.3 in August from 55.5 in July, much higher than forecast by economists.

"It's too early to say worries about a double-dip recession in the economy have been wiped away just because China's PMI, Australia's GDP and U.S. data weren't bad," said Masahiko Sato, an executive director at Nomura Securities' equity marketing department. "But stocks may become more resilient to poor economic indicators going forward and gain further if money that had shifted to bonds on extreme concern over the economy comes back to equities, early signs of which have likely appeared in US, Germany and UK bonds after yesterday's data." The benchmark Nikkei gained 95.71 points to 9,022.73.

It rose 1.2 per cent on Wednesday, after falling as low as 8,796.45, its lowest since April 2009. The broader Topix inched up 0.7 per cent to 817.35. "With U.S. stocks jumping and worries about risk-taking somewhat receding, the market will likely climb at first," said Kazuhiro Takahashi, general manager at Daiwa Securities Capital Markets. "But then investors will probably stand on the sidelines as the yen is still on the strong side, and there's a growing sense of uncertainty about Friday's jobs data after the poor ADP data."

Investors on Wall Street shrugged off a report from ADP Employer Services even though it showed private U.S. companies unexpectedly cut 10,000 jobs in August. Government data also indicated U.S. construction spending fell to its lowest rate in 10 years. The next targets for the Nikkei will likely be around 9,280 and then 9,360, highs hit in late August, Takahashi said.

If it resumes falling, the next technical level is 8,697, a 61.8 per cent retracement of the rally from its March 2009 low to its April 2010 high. Honda Motor Co and other exporters that are sensitive to the health of the world economy led gains in the overall market. Honda rose 1.8 per cent to 2,856 yen, Canon Inc rose 1.7 per cent to 3,525 yen and Sony Corp gained 1.7 per cent to 2,416 yen.