Tokyo stocks up at break after strong US data

Tokyo stocks rebounded Tuesday morning after strong US economic data powered Wall Street to another record close a day after being hit by Italy uncertainty.

The Institute for Supply Management reported Monday that the US service sector saw growth accelerate at the fastest pace in more than a year in November as employment and export orders rose.

"The favourable ISM non-manufacturing data from the US will once again breathe life into stocks," said Toshihiko Matsuno, a senior strategist at SMBC Friend Securities.

"After experiencing surprise outcomes like Brexit, investors have shown a tendency to reduce their positions ahead of news events, leading to price declines, but we are still in the midst of a continuing Trump-driven rally," he told Bloomberg News.

Donald Trump's surprise US presidential victory has sparked a rally in equity markets and pushed the dollar higher on expectations of big government spending and a rise in interest rates.

Tokyo's benchmark Nikkei 225 index rose 0.52 percent, or 95.84 points, to end the morning at 18,370.83, while the broader Topix index of all first-section issues was up 0.70 percent, or 10.27 points, at 1,477.23.

The gain reversed Monday's losses triggered by worries about political instability in the eurozone and beyond after the resignation of Prime Minister Matteo Renzi following a crushing defeat in a constitutional referendum.

"Japan was the only major market trading immediately after the (referendum) results, so it feels like it took the blow from investors who wanted to sell for hedging purposes," said Hajime Sakai, a fund manager at Mito Securities.

"Now there's buying in relief after seeing global markets calm, or rise rather, putting behind another risk event," he added.

European stocks and the euro rebounded Monday from initial losses as investors looked beyond the Italian vote outcome.

US stocks notched strong gains, with the Dow climbing to its second record in three days and the tech-rich Nasdaq adding one percent.

Financial stocks were higher, with Mizuho Financial Group up 1.77 percent at 212 yen and Nomura Holdings added 2.90 percent to 695.4 yen.

Honda gained 1.27 percent to 3,344 yen and Toshiba rose 2.58 percent to 447.7 yen.

Japan Cash Machine, a leading maker of bill-validating machines, tumbled 4.24 percent to 1,443 yen after recent rises driven by expectations that Japan will finally legalise casinos after years of false starts.

The powerful lower-house of parliament was set to pass on Tuesday a long-awaited bill that could see casinos legalised in a market viewed as a potential global gaming powerhouse.

The dollar was trading at 113.61 yen Tuesday against 113.77 yen in New York.

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