Japanese stocks jumped to close at a two-week high with the benchmark Nikkei index ending trading up 1.9% to finish Tuesday's business at 15,552.59.
Japanese stocks have fallen nearly 10% so far in 2007
Trading was light after Monday's holiday in Japan and with most overseas investors closed for Christmas.
Japanese shipping companies, financial groups and industrial companies such as Hitachi led the gains.
The Nikkei-225 stock index has so far dropped nearly 10% this year after gaining 6.9% in 2006.
A slightly weakening US dollar and a rally on Wall Street contributed to Tuesday's gains, said analysts.