Tokyo shares are likely to rise next week as news of European leaders striking a deal on the eurozone crisis and some positive signs for Japan's economy boost sentiment, dealers said Friday.
In the week to June 29, the Nikkei 225 index at the Tokyo Stock Exchange gained about 2.4 percent, or 208.43 points, to 9,006.78.
The broader Topix index of all first-section shares rose 2.6 percent, or 19.16 points, to 770.08.
Japanese stocks jumped 1.50 percent on Friday, ending above the 9,000 level, after EU president Herman Van Rompuy said the eurozone would make a more "flexible" use of its rescue funds in order "to reassure markets and to get again some stability around the sovereign bonds of our member states."
Such action would be reserved for "well-behaving" nations, he added.
Facing soaring interest rates, Italy and Spain had blocked an EU growth pact until their partners yielded to their demands to use the rescue funds to buy bonds in the markets.
"It is a good catalyst because it wiped out some worries, since now Spain is likely to secure financial aid through the safety net," Rakuten Securities senior market analyst Masayuki Doshida told Dow Jones Newswires.
"But it's not a fundamental solution for the debt problems," he added.
Toshihiko Matsuno, research head at SMBC Friend Securities, said investors see positive signs for Japan's economy after a drop in May's unemployment rate and strong household spending, although weaker factory output weighed.
"If the yen gets weaker that would be even better, but the Japanese economy is still showing some strength," Matsuno told AFP.
The jobless rate dropped to 4.4 percent in May from 4.6 percent in the previous month while household spending jumped 4.0 percent in the month from a year earlier, outpacing economists' expectations.
Industrial production, however, tumbled 3.1 percent in the month as a slump in overseas markets, particularly Europe, weighed.
Investors are now eyeing a key survey next week on large Japanese manufacturers' business sentiment, Matsuno said.
"Since Tokyo shares already seem to be oversold, the expectation is high for stock prices to rise more next week."
Matsuno said the Nikkei could rise as high as the 9,400 level.