Japanese stocks recovered after two days of losses as the dollar strengthened slightly, ending its decline which had brought it as low as ¥110 on Tuesday. The rise in Wall Street also helped support the share market.

The Nikkei index rose 235.72 points or 1.78% to 13,468.46, recovering from its lowest close since 15 October 1998. The broader TOPIX index of all shares was up just under 1%, or 10.43 points, to 1,058.76.

Traders said that shares in exporters continued to suffer from the weak dollar, which makes their goods - priced in yen - more expensive.

"Shares in exporters aren't that strong despite the rise in Wall Street because the dollar remains weak," commented Masatoshi Sato of Kankaku Securities.

But bank shares strengthened on the back of better Japanese government bond prices, while speculation about consolidation drove up shares in auto companies like Honda and Nissan. Overseas investment in Japanese stocks is also lower than expected, depressing market sentiment.