The Nikkei stock average rose 0.4 percent on Wednesday, shrugging off data showing Japan's biggest economic contraction on record, with high commodity prices buoying trading houses such as Mitsubishi Corp <8058.T>.
Nissan Motor Co <7203.T> rose more than 3 percent after the automaker said on Tuesday orders for its low-emission cars are up 30 percent in Japan so far in May from the same period a year earlier, helped by new government tax incentives for low-emission cars.
First quarter gross domestic product (GDP) shrank 4 percent as a plunge in global demand drove Japan's export-driven economy further into recession, but that was smaller than the 4.2 percent drop expected by economists, who see a return to modest growth in coming quarters for the world's No.2 economy.
There was some reassurance from the GDP figures coming in about as expected, said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.
The market was a bit disappointed by yesterday's U.S. housing figures, but recent indicators have been coming in quite strong, so people were probably expecting too much this time.
U.S. housing starts and permits fell unexpectedly to record lows in April.
Investors were heartened, though, by the Chicago Board Options Exchange Volatility index <.VIX>, known as Wall Street's fear gauge, falling below 30 for the first time since the collapse of Lehman Brothers eight months ago.
The benchmark Nikkei <.N225> gained 33.43 points to 9,323.72, while the broader Topix <.TOPX> rose 0.2 percent to 881.91.
Resistance was seen just below 9,500, where the Nikkei's 200-day moving average comes in. The Nikkei touched a six-month high of 9,503 on May 11 but has been unable to break higher.
Resource-linked shares gave the Nikkei a solid boost after oil prices touched a six-month high on Tuesday after a flurry of U.S. refinery problems stoked supply fears leading into the peak summer driving season, and metals also gained.
Trading company Mitsui & Co <8031.T> rose 4.4 percent to 1,160 yen and Mitsubishi climbed 3.7 percent to 1,723 yen. Fellow trader Itochu Corp <8001.T> gained 3.4 percent to 669 yen.
Domestic demand-linked stocks such as retailers were among the leading drivers of the Nikkei's rise, with drug makers also gaining ground amid signs the new flu strain is spreading in Japan. Mitsubishi UFJ Financial Group <8306.T> was flat after Japan's largest bank, reported a $2.2 billion quarterly loss, its second in a row, hit by a damaging recession and hefty losses on its stockholdings, but it forecast a return to profit.
(Reporting by Elaine Lies)