Toyota said it hadn't decided whether to recall its third-generation Prius hybrid after more than 100 drivers complained about a slow braking problem.
The Nikkei business daily said on Friday the company may recall around 270,000 units of its flagship Prius in the United States and Japan to fix the problem.
Toyota shares rose to 3,335 yen, rebounding after a dip soon after the opening bell. On Thursday, ahead of its results, Toyota's shares fell 3.5 percent to close at a 10-month low.
It looks like some investors find Toyota shares attractive at current levels as the stock has fallen to about one times its price to book ratio, said Eiji Hakomori, analyst at Daiwa Securities Capital Markets.
Toyota shares outperformed the export-oriented Nikkei stock average, which dived 2.7 percent on the back of the stronger yen and an unexpected rise in jobless claims in the United States.
Already reeling from two massive recalls, Toyota faces the possibility of a third as U.S. safety regulators have opened a probe into the braking problem on the Prius, the world's top-selling hybrid.
The probe of the Prius, which has powered Toyota's image of fuel efficiency, compounds a safety crisis that has hit its sales, financial results and reputation for quality and prompted the recall of more than 8 million vehicles around the world for problems with uncontrolled acceleration.
Analysts and rivals say the Prius has emerged as a kind of environmental halo car for Toyota, an icon of green design with an intense following among loyalists, which has lifted the public image of the whole company.
Toyota said on Thursday that the recalls of its conventional gas-powered vehicles would cost it up to $2 billion in the January-March quarter.
A change to the ABS system for the Prius is an additional latent expense. We estimate related expenses at some 3 billion yen, Morgan Stanley analyst Noriaki Hirakata said in a note to clients.
(Reporting by Yumiko Nishitani; Editing by Hugh Lawson)