Tokyo stocks up 0.88% by break

Tokyo stocks rose 0.88 percent Wednesday morning as the yen sat around a seven-year low against the dollar, while Wall Street saw another record close.

The benchmark Nikkei 225 index at the Tokyo Stock Exchange was up 149.84 points at 17,273.95 by the break, while the Topix index of all first-section shares climbed 0.73 percent, or 9.99 points, to 1,385.20.

The yen, which has plunged since the Bank of Japan expanded its monetary easing programme last month, slipped further Tuesday on speculation Prime Minister Shinzo Abe may put off next year's planned sales tax increase.

In Tokyo Wednesday the Japanese currency was at 115.34 against the dollar, after slipping past 116 in New York for the first time since October 2007.

The tax rumours come as the government tries to deal with the fall-out of an April levy hike that threw a tentative recovery into reverse and threatens to plunge the economy into recession.

"Speculation about the sales tax deferment is going to cause the currency markets to be volatile for a while, and that could result in more stock market volatility as well," said Masayuki Doshida, senior market analyst at Rakuten Securities.

Abe needs to decide whether to go ahead with plans to raise the nation's sales tax to 10 percent in October 2015 after a rise to 8.0 percent from 5.0 percent in April.

Tax hikes are designed to help curb Japan's massive public debts, but consumer spending remains lacklustre following this year's increase.

However, a delay could hit Japan's fiscal reform and weaken the yen further.

A cheaper yen helps Japanese exporters by making them more competitive abroad and boosting the yen value of their repatriated profits.

Eyes are now on Japan's July-September gross domestic product data due Monday.

Major newspapers also reported Wednesday that Abe may call a snap election next month if he decides to put off the next tax hike.

His ruling coalition would be likely to win the election, which would be greeted positively by the stock market and trigger fresh yen-selling, analysts said.

-- Dow Jones Newswires contributed to this article --