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Japanese stocks rose on Thursday morning after soft economic data and weakness on Wall Street bolstered views that the US Federal Reserve will keep putting off hiking interest rates and investors bought buy defensive shares.
The Nikkei share average was up 0.8 per cent to 18,029.21 at the mid-day break.
Market participants cautioned that the rally was largely built on investors moving into defensive stocks in response to overnight losses on Wall Street. The Dow fell 0.9 per cent and the Nasdaq 0.3 per cent.
"It's not a very healthy recovery when pharmaceuticals are leading the charge," said Nicholas Smith, a strategist at CLSA. "Investors are picking up defensives and pretty expensive defensives at that."
The Topix subindex for pharmaceuticals gained 2.3 per cent as investors moved out of cyclicals that had been bought during recent bouts of short-covering. Kyowa Hakko Kirin rose 4.8 per cent and Daiichi Sankyo Co shares climbed 4.4 per cent.
Japan's steel sector, which tumbled 4.5 per cent on Wednesday, bounced back 1 per cent during morning trading. Nippon Steel & Sumitomo Metal rose 0.7 per cent, while JFE Holdings gained 1.3 per cent.
Steel has been one of the Nikkei's top performing sectors since late September and traders said it's remained active because of short-covering that has resulted in big price moves.
The broader Topix rose 0.9 per cent to end the morning session at 1,483.88, while the JPX-Nikkei Index 400 gained 0.9 per cent to 13,285.69.
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