The Japanese stock market climbed into positive territory on Tuesday after opening lower following the overnight sell-off on Wall Street on renewed concerns about the auto and financial sectors.

In early morning trades, the benchmark Nikkei 225 Index was gaining 70.37 points or 0.85% to 8,306.45, while the broader Topix Index of all First Section Issues was down 2.11 points or 0.27% to 787.43.

Overnight, U.S. stocks closed sharply lower. While the Obama administration will continue to provide operating funds for the next few weeks, it has given both automakers General Motors and Chrysler a final deadline, threatening bankruptcy if the beleaguered auto giants do not significantly increase their efforts to restructure their business. Additionally, Rick Wagoner was pushed out as chief executive of General Motors by the government. Meanwhile, financial stocks experienced considerable weakness after Treasury Secretary Geithner suggested that more banks might need bailout funds.

Crude oil prices plunged below $49 on Monday as worries over the U.S. auto and banking industries fueled demand concerns again. A stronger dollar also lessened the hedge appeal of commodities. Light sweet crude for May delivery closed at $48.41 on the New York Mercantile Exchange, down $3.97 for the session.

The Japanese stock market closed sharply lower on Monday, recording its biggest one-day fall in more than two months. Financial stocks slipped following fresh concerns on the stability of the global financial sector, while automakers declined after the U.S. government stated that bankruptcy might be the best solution for troubled U.S. automakers. The Nikkei 225 Index lost 390.89 points or 4.5% to close at 8,236 and the Topix Index declined 34.99 points, or 4.2% to close at 789.54.

Among a raft of economic data on Tuesday, the Ministry of Health, Labor and Welfare said that Japan's seasonally adjusted unemployment rate came in at 4.4% in February, slightly higher that forecasts for a 4.3% increase after the 4.1% gain in January.

All household spending was down 3.5% on year versus expectations for a 4.7% annual fall after the 5.9% contraction in January. Wage earner household spending was off an annual 1%. The propensity to consume came in at 75.7%, up 1.6 points on year. It was 87.1% in January.

Later in the day, Japan is also slated to release data on construction orders and housing starts. Construction orders were down 38.3% a month earlier. Housing starts are expected to fall 17.7% on year to 0.95 million yen.

In the currency market, the U.S. dollar was trading in the upper 97 yen-range on Tuesday. In early morning trades, the dollar was quoted in a range of 97.65-97.68 yen, up 1.49 yen from Monday's close of 96.16-96.19 yen in Tokyo.

Banking stocks are trading sharply lower. Mitsubishi UFJ, Japan's biggest bank, is losing 1.63%, Mizuho Financial is down 2.03%, Sumitomo Mitsui is sliding 3.28% and Resona Holdings is declining 1.25%. Brokerage Nomura Holdings is down 2.10%.

Mizuho Financial said on Monday that it will not redeem $1.5 billion of perpetual subordinated bonds issued to retail investors when they first become callable next month due to current market conditions and in a bid to preserve capital.

Exporters are trading lower despite a weaker yen. Canon is losing 1.03%, Sony is easing 0.97% and Sharp is down 1.45%. Among automakers, Toyota is easing 0.64% and Honda is losing 0.43%.

Oil-related stocks are also declining. Inpex is adding 1.91%, while Nippon Oil is losing 1.42% and Showa Shell is down 1.75%. Meanwhile, trading house Mitsubishi Corp. is declining 2.34%, Sumitomo Corp. is losing 1.71% and Itochu is down 1.64%.

Fujitsu Ltd said it aimed to double PC server sales in two years to lift its global share to 7% in 2010, from the current 4%. However, the company's stock is down 0.82%.

Mobile phone company Softbank Corp has sold more than 490,000 Yahoo Japan Corp shares held by a subsidiary to buyers outside of the Softbank group, the Nikkei business daily reported Monday. Softbank's shares are currently gaining 1.22%.

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