A stronger-than-expected reading on Japanese machinery orders pushed up machinery stocks such as industrial robot maker Fanuc Ltd. on Monday, sending the Nikkei average 0.55 percent higher.
But shares of real estate firms such as Mitsui Fudosan and Mitsubishi Estate weighed on the market after the data fuelled concern about higher interest rates.
A rise in U.S. stocks and the machinery data lifted the market at the opening, but gains are likely to be limited ahead of a string of economic indicators later in the week and the election, said Yutaka Miura, deputy manager of the equity information department at Shinko Securities.
The stronger-than-expected machinery data would also likely cause concerns about rate hikes by the Bank of Japan, capping a further advance in today's market.
The benchmark Nikkei finished the morning up 99.90 points at 18,240.84. The broader TOPIX index added 0.59 percent to 1,790.23.
Trade volume was moderate, with 868 million shares changing hands on the Tokyo exchange's first section. Advancing shares outnumbered decliners by a ratio of nearly three to one.
MACHINE STOCKS UP, PROPERTY FIRMS FALL
Shares of Fanuc and other machinery stocks climbed after data showed Japan's core private-sector machinery orders rose 5.9 percent in May from the previous month, beating economists' consensus forecast for a 2.3 percent rise.
Industrial robot maker Fanuc was up 0.9 percent at 12,810 yen, construction machinery maker Komatsu Ltd. added 1.6 percent to 3,790 yen, and machine tool producer Okuma Holdings Inc. gained 2.2 percent to 2,100 yen.
But property issues fell with Mitsui Fudosan losing 1.7 percent to 3,460 yen, while Mitsubishi Estate fell 1.5 percent to 3,340 yen.
The mood in the market is not to aggressively buy real estate stocks as the possibility of rate hikes in August has increasingly become higher, said Kenichi Hirano, operating officer at Tachibana Securities.
Many in financial markets expect the Bank of Japan to raise its key policy rate target to a 12-year high of 0.75 percent in August, after elections for parliament's upper house.
Elsewhere, Marubeni Corp., Japan's fifth-biggest trading company, climbed 3.7 percent to 1,093 yen, extending gains on higher commodity prices after oil prices hit an 11-month high above $76 a barrel on Friday.
In addition, news that Toshiba Corp. is in talks to sell 10 percent of its stake in nuclear power unit Westinghouse to Kazakh state firm Kazatomprom has revived interest in Marubeni's uranium development there.
Shares of Toshiba added 2.7 percent to 1,081 yen.
Shares of Sawai Pharmaceutical Co. Ltd. and other makers of generic drugs climbed after the Nikkei business daily said major Japanese firms like Nippon Telegraph and Telephone Corp. (NTT) were encouraging employees to use the lower cost drugs.
Sawai was up 2.6 percent at 4,400 yen. Towa Pharmaceutical Co. Ltd. rose 3.2 percent to 5,200 yen and Nippon Chemiphar Co. Ltd. gained 1.9 percent to 529 yen.
Among other gainers, Showa Shell Sekiyu KK added 1.9 percent to 1,531 yen after a weekend Nikkei business daily report said it would link more of its gasoline stations with supermarkets and convenience stores nationwide, under a new brand.
Shares of Ulvac Inc. jumped 4.2 percent to 4,720 yen after the Nikkei newspaper reports that the flat-panel display maker is expanding its solar cell operations to meet rising demand.