Japan's Nikkei hits 1-month high on Wall Street gains, weaker yen

Japan's Nikkei share average rose on Monday to touch the 39,000 level for the first time since late July, helped by a softer yen and Wall Street's gains at the end of last week.

The Nikkei .N225 had risen 0.2 per cent to 38,709.88 by the midday break. It hit its highest since July 31 at 39,080.64 earlier in the day before profit-taking started as the yen's slide stalled. The broader Topix .TOPX was flat at 2,712.56.

Wall Street stocks gained on Friday after fresh economic data raised expectations that the U.S. Federal Reserve would cut interest rates modestly in September. U.S. markets are closed on Monday for a public holiday.

The dollar gained against the yen following the latest U.S. economic data, lifting the shares of Japanese exporters. FRX/

A softer Japanese currency helps exporters as it increases the value of overseas profits in yen terms when firms repatriate them to Japan.

Uniqlo parent and Nikkei heavyweight Fast Retailing 9983.T was last up 0.5 per cent, while Toyota Motor 7203.T edged up 0.9 per cent, Honda Motor 7203.T climbed 1.6 per cent and Mazda 7261.T gained 0.8 per cent.

The transport equipment sector .ITEQP.T, which was the top performer in early trade, cut gains to finish the morning session up 0.8 per cent.

Global stock markets fell sharply early last month on fears of an imminent recession in the world' largest economy, but economic data has since buoyed expectations of a soft landing.

Markets remain focused on U.S. labour data though, putting attention this week on the weekly unemployment numbers due on Thursday and August non-farm payrolls due on Friday.

Some market participants are still worried about risks of a possible hard landing, "so unless that is dismissed, it will be difficult for the Nikkei to exceed 39,000 points and keep rising," said Masayuki Kubota, chief strategist at Rakuten Securities.

Investors will also be monitoring the yen's direction as well, he added.

The largest percentage gainer on the Nikkei was IHI Corp 7013.T with a rise of 4.5 per cent, followed by Kawasaki Heavy Industries 7012.T, which was up 3.8 per cent, and Advantest Corp 6857.T, which climbed 3.2 per cent.