TOKYO: Tokyo stocks rose 0.48 percent on Thursday, bouncing back following heavy losses in the previous session caused by concerns over a diplomatic spat with China.
The Nikkei 225 index at the Tokyo Stock Exchange gained 43.17 points to 8,949.87. The Topix index of all first-section issues rose 0.41 percent, or 3.05 points, to 745.59.
Early trade in Tokyo lacked direction as bargain hunting was offset by concerns over Spain's economy and ongoing tensions between Japan and China, dealers said.
"Public demonstrations taking place in Spain are stoking concerns," Hiroaki Osakabe, fund manager at Chibagin Asset Management, told Dow Jones Newswires.
As for China-Japan tensions and their potential effects on Japanese firms, "no optimism is warranted", he said, adding: "it's a political matter. If it's prolonged, earnings could worsen."
However, gains in some Asian stocks, particularly in China, limited falls, Hiroichi Nishi, general manager of equity division at SMBC Nikko Securities, told Dow Jones Newswires.
In Europe, tensions over harsh austerity measures have spilled on to the streets of Spain and Greece.
Thousands of protestors rallied near the Spanish parliament for a second straight night Wednesday after a rough day on the markets again raised the likelihood of a full bailout and deeper economic pain.
The government is due to pass its 2013 austerity budget on Thursday, with 39 billion euros ($50 billion) in savings, including an anticipated third straight year of salary freezes for civil servants.
In Athens police and masked youths clashed during a nationwide strike in protest at a new round of cuts introduced in return for crucial loans from the European Union and International Monetary Fund.
The row between Tokyo and Beijing over a group of islands in the East China Sea -- called Senkaku in Japan and Diaoyu in China -- has hit shares ranging from automakers to machinery companies.
Nissan and Toyota fell more than two percent on Wednesday on their plans to reduce production in China as demand for Japanese cars has been hit by ongoing tensions.
Nissan slipped 0.15 percent to 663 yen on Thursday while Toyota Motor rose 0.48 percent to 3,115 yen. Honda rose 1.02 percent to 2,463 yen. (AFP)
