Tokyo shares close 1.94% higher

Tokyo shares closed up 1.94 percent Wednesday, rebounding from losses over the first two trading days of the new year, as Wall Street provided a strong lead while the yen eased against the dollar.

The benchmark Nikkei-225 index ended 307.08 points higher at 16,121.45, and the Topix index of all first-section shares rose 1.79 percent, or 22.98 points, to 1,306.23.

The Nikkei lost almost three percent from Monday to Tuesday after surging 57 percent last year -- its best performance since 1972.

The Dow rose 0.64 percent in New York, while the S&P 500 gained 0.61 percent and the Nasdaq climbed 0.96 percent thanks to a solid November trade report.

Investors are awaiting the release of minutes from the Federal Reserve's most recent policy meeting later Wednesday to see if another cut in its stimulus could be on the cards. The central bank said at its last meeting that from January it would cut its bond-buying by $10 billion a month to $75 billion.

Traders are also eyeing key US jobs data due later this week for signs of a firming recovery in the world's biggest economy.

"There is a risk the US non-farm payrolls data awaited later this week will disappoint," an equity trading director at a foreign brokerage told Dow Jones Newswires.

"But the opposite scenario -- a strong report -- could also generate fears of an acceleration in the Fed's tapering programme, from which a rise in interest rates could prove unfriendly to equity markets."

On Wednesday the Nikkei was lifted by a weaker yen, with the dollar buying 104.89 yen against 104.69 yen in New York trade.

A weaker currency inflates the repatriated profits of Japanese exporters and makes them more competitive overseas.

Japanese game maker Nintendo soared 10.76 percent to 15,850 yen and Sony was up 1.38 percent at 1,825 yen after news that China has formally authorised videogame consoles made in a new Shanghai free-trade zone to be sold in the country.

Toyota shares edged up 0.47 percent to 6,300 yen, Uniqlo clothing chain operator Fast Retailing gained 2.09 percent to 41,350 yen, and Japan's biggest bank Mitsubishi UFJ added 2.21 percent to 692 yen.

Canon added 1.67 percent to 3,330 yen following a report in the leading Nikkei business daily that the camera and copier maker would shift some overseas production back to Japan owing to the yen's sharp decline over the past year.