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European leaders to support debt-laden Greece eased fears of a broader euro zone crisis.
Mitsubishi Corp and other resource shares gained after metals rose on Chinese data showing banks had made a stronger-than-forecast 1.39 trillion yuan of loans in January, while consumer inflation moderated more than expected in the year to January.
European leaders said on Thursday they had struck a deal to help heavily indebted Greece, an unprecedented move to stave off a broader crisis in the 16-nation bloc that shares the euro single currency. But no details were announced.
"A series of negative factors such as concerns about Greece's problems and China's tightening policy are now priced in. But we still lack reasons to buy up the market further," said Masaru Hamasaki, a senior strategist at Toyota Asset Management.
"Worldwide economic measures, which have helped improve corporate earnings and the economy, are gradually coming to an end and there's a sense of uncertainty about what will happen after those programmes actually end."
Analysts also said that while recent risk aversion arising from concern about the fiscal stability of Greece, Portugal and Spain had eased enough to help all three Wall Street indexes rise more than 1 per cent, there were still many uncertainties about the fiscal outlook for Europe.
"The pledge of support is basically just what you'd expect - European leaders can hardly say they'll just ignore Greece," said Kenichi Hirano, operating officer at Tachibana Securities.
"The really important thing is how they'll carry out this support, and that's something we don't know yet. Gains in Tokyo today are mainly due to bargain-hunting and will be limited."
The benchmark Nikkei was up 95.43 points at 10,059.42, while the broader Topix gained 0.8 per cent to 890.24. Hirano said support for the Nikkei was solidifying around the level of its 200-day moving average just under 10,000 after the benchmark broke below that earlier this week.
Its next target is 10,160, where its 75-day average currently comes in, and then 10,275, where a gap was created on daily charts during the Nikkei's slide last week. Chart gaps can sometimes be targets to be filled in a correction.
Trading energy was also dampened by investor wariness ahead of next week's Lunar New Year holiday in China, some market players said.
EXPORTERS, RESOURCE STOCKS HELP
Exporters were one target of bargain-hunters, with Sony Corp rising 1.2 per cent to 3,055 yen and Toshiba Corp gaining 1.2 per cent to 425 yen.
Toyota Motor Corp rose 2.1 per cent to 3,460 yen after the Asahi newspaper reported that President Akio Toyoda would attend US congressional hearings set for Feb. 24-25 and March 2 to explain a series of safety issues.
Separately, the Yomuiri newspaper reported that in an effort to regain its standing with customers, Toyota has decided to publicise all car problems including the ones which are not subject to recalls.
Copper rallied on Thursday to a two-week high and other metals gained across the board also after the Chinese data, with the lower inflation numbers easing fears of an imminent hike in official benchmark deposit and lending rates.
Mitsubishi Corp climbed 3.2 per cent to 2,224 yen and fellow trader Mitsui & Co gained 4.7 per cent to 1,339 yen. Pacific Metals, a maker of ferronickel, jumped 6.8 per cent to 614 yen.
Shares of Nippon Denko Co shot up 5.7 per cent to 554 yen after Nippon Steel said it will raise its stake in the ferroalloy maker to 15 per cent from 9.5 per cent as part of an alliance between the two firms.
Nippon Steel was down 0.3 per cent at 322 yen. Consumer finance firm Promise Co bucked the trend, sliding 7 per cent to 690 yen after the company's president told Reuters he expects its outstanding loan balance to shrink by about 30 per cent in the next three years due to stricter regulations.
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