Tokyo stocks rose 0.96 percent Thursday on hopes Japan's opposition wins a recently called general election, but Sony tumbled more than 10 percent on worries about a new $1.9 billion bond issue.
The benchmark Nikkei 225 index at the Tokyo Stock Exchange was up 83.56 points at 8,748.29 by the end of the morning session while the Topix index of all first-section shares rose 1.13 percent, or 8.17 points, to 730.58.
Markets bet on Japan's business-friendly opposition leader Shinzo Abe unseating Prime Minister Yoshihiko Noda and his Democratic Party of Japan at polls next month -- spurring expectations it would pave the way for more monetary easing.
That helped weaken the yen and, in turn, lift the Tokyo market Thursday.
"The market rise is a raspberry for the outgoing DPJ government," said CLSA equity strategist Nicholas Smith.
"The head of the likely election winner, the LDP (Liberal Democratic Party), has said he will change the law so that the central bank's board must bend to his will or face the sack.
"The market is salivating over the free money that implies," he told Dow Jones Newswires.
An LDP victory is seen as a plus for Japanese industry amid rising concern over the state of the world's third-largest economy following a string of weak data, said an equity trading director at a foreign brokerage.
"But with so many external problems still lurking, including the US fiscal cliff, turmoil in Greece and Spain, Israel-Palestine tensions, and China corruption/slowdown fears, the rest of the world will not serve as a tailwind."
There are rising fears that the United States could hit a fiscal cliff of tax hikes and spending cuts if a deal between bitterly divided Republicans and Democrats is not reached before January 1.
Markets were also watching Middle East tensions after an Israeli air strike in Gaza Wednesday that killed a Hamas military chief, reigniting tensions in the region.
And eurozone fears were stoked by huge anti-austerity strikes in Europe, while Greece and Portugal released another set of weak growth data.
In Tokyo trade, Sony tumbled 10.57 percent to 778 yen after the troubled Japanese electronics maker announced it would issue convertible bonds worth 150 billion yen ($1.9 billion), sparking dilution fears.
Other major exporters rose, with Honda up 3.11 percent to 2,418 yen and Canon climbing 2.99 percent to 2,510 yen.