Tokyo's Nikkei closes up 2.6% on cheap yen

Tokyo stocks closed higher on Tuesday following reports that US lawmakers had agreed in principle to avoid a government shutdown, with the market also helped by a cheaper yen.

The benchmark Nikkei 225 index soared 2.61% to end at 20 864.21, while the broader Topix index rose 2.16% to 1 572.60.

"Tokyo stocks continued to rise after the reports on the US agreement to avoid a goverment shutdown," Okasan Online Securities said in a note.

US Senator Richard Shelby, a key Republican negotiator, told reporters late on Monday that lawmakers from the Republicans and Democrats had reached a deal in principle.

The agreement included $1.4bn in funding for a wall on the US-Mexico border - a key campaign promise of President Donald Trump.

Okasan added that Tokyo investors were mainly snapping up stock in exporters on the back of a cheaper yen.

The dollar changed hands at ¥110.56 in Asian trade, up from ¥110.37 in New York late on Monday and ¥109.68 in Tokyo on Friday.

The rally came after Tokyo shares closed down more than 2% on Friday.

The Japanese market was closed on Monday for a public holiday.

Carmakers were generally higher on the Tokyo market, with Toyota up 2.41% to ¥6 605, Nissan 1.87% to ¥931.4 ahead of quarterly results and Honda 0.80% higher to ¥2 950.

Toshiba dropped 5.89% to ¥3 195 after it indicated it would revise down its full-year operating profit forecast in its third-quarter earnings report due on Wednesday.

SoftBank Group rose 2.44% to ¥10 260 after an announcement that its SoftBank Vision Fund will invest nearly a billion dollars in Silicon Valley startup Nuro, which is working on self-driving delivery vehicles.