Stocks in Tokyo shrugged off a weak start to Tuesday's session as the latest Tankan sentiment survey showed a deterioration in confidence among Japan's largest manufacturers but a bigger than expected increase in investment plans.

Japanese business sentiment dipped in the three months to June, the latest Bank of Japan's Tankan survey showed. The index, which measures confidence among the nation's biggest manufacturers, fell to plus 12, from plus 17 in the previous quarter, marking the first deterioration in sentiment in six quarters.

However, the survey also showed Japan's largest companies plan to increase their investment by 7.4% in the current financial year, significantly more than the 0.1% gain signaled three months earlier and a clear indication that manufacturers are upbeat about the economy.

Among stocks movers, Sony added 1.3% after it said it was confident its television division will post a profit this year.

Olympus Corp advanced 2.3% while Japan Display climbed 1.9% in Tokyo.

The benchmark Nikkei 225 index closed up 1.08% or 164 points at 15,326 while the broader Topix closed up 13 points or 1.07% at 1,276. The Hang Seng was closed for holiday on Tuesday.

Manufacturing activity in China improved for the fourth consecutive month in June, at the fastest pace in six months, official government data showed.

The National Bureau of Statistics (NBS) said that the official manufacturing purchasing managers' index (PMI) rose from 50.8 in May to 51 in June, an indication that recent stimulus moves are starting to make a positive impact on the world's second largest economy.

Elsewhere the Reserve Bank of Australia kept its key interest rate at a record low on Tuesday.

CJ

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