TOKYO - Tokyo stocks jumped 1.45 per cent Monday morning after Cyprus and eurozone officials struck a last-minute deal that will see the island qualify for a much-needed bailout.
The benchmark Nikkei 225 index added 178.96 points to 12,517.49 by the break, with a weaker yen also providing support. The Topix index of all first-section shares rose 0.86 per cent, or 8.92 points, to 1,047.49.
Bargain-hunters also moved in following a big sell-off Friday, with dealers encouraged by the Cyprus deal and a rebound on Wall Street that saw the Dow finish 0.63 per cent higher.
"The Cyprus banking problem is a point of focus, but has yet to seriously derail the current equity rallies in the United States and here in Japan," Hiroichi Nishi, general manager of equities at SMBC Nikko Securities, told Dow Jones Newswires.
Final backing for the rescue came after about 12 hours of talks between Nicosia, the European Union, European Central Bank, International Monetary Fund and eurozone leaders.
The agreement involves breaking up the island's second largest lender Laiki (Popular Bank), while deposits above 100,000 euros ($130,000) in the Bank of Cyprus, the island's main lender, will take a major "haircut".
Markets feared that failure to reach a deal could see the tiny Mediterranean country exit the 17-nation eurozone with the fallout spreading to other troubled bloc members including Italy and Spain.
In morning forex trade, the euro rose to $1.3030 and 123.62 yen, strengthening from $1.2986 and 122.72 yen late Friday in New York. The dollar also climbed to 94.86 yen from 94.46 yen.
In Tokyo Sony was up 1.20 per cent to 1,680 yen by the break, Canon rose 0.28 per cent to 3,510 yen, and Toyota added 0.92 per cent to 4,925 yen.
Japan Airlines was up 0.53 per cent at 4,690 yen on a report in the leading Nikkei business daily that said the carrier was mulling the purchase of about 20 Airbus A350 jets to replace its Boeing 777 jets from 2017.