Tokyo stocks gain 0.36% by break

Tokyo stocks rose 0.36 percent Thursday morning, reversing earlier losses as the yen slumped following showing Japan logged a record trade deficit last year.

The benchmark Nikkei 225 index added 37.75 points to 10,524.74 by the break, while the broader Topix index of all first-section shares was up 0.18 percent, or 1.60 points, at 889.39.

Tokyo reported a record $78 billion trade deficit for 2012 as exports were hit by weak demand in debt-hit Europe plunged and a bitter diplomatic spat with its biggest trade partner China, which sparked a consumer boycott.

The gloomy numbers spell more bad news for the world's third-largest economy, as it struggles to cement a recovery after the 2011 quake-tsunami disasters and subsequent nuclear crisis at Fukushima.

They also underscore the size of the task ahead for the new government of Prime Minister Shinzo Abe who campaigned on a pledge to turn around Japan's fortunes with big public spending and by pressuring the Bank of Japan for more aggressive monetary policy.

Thursday's news sent the yen lower, capping a recent rally that began Tuesday as dealers were left disappointed by the BoJ's announcement of an open-ended easing programme and adoption of a two percent inflation target.

But in forex trade, the greenback firmed to 88.73 from 88.56 yen in New York late Wednesday, while the euro gained to 118.11 yen from 118.00 yen.

The rise in Tokyo equities also followed a positive lead from Wall Street, where the Dow gained 0.49 percent to its highest level since October 2007.

On the Nikkei Olympus fell 1.30 percent to 1,960 yen after a two-day rally on hopes that the camera and medical equipment maker would be taken off the Tokyo bourse's "supervisory post" that signals a possible delisting.

The company was put on the list after a high-profile accounting scandal.