Japanese stocks edged up to a fresh four-month high on Tuesday, supported by optimism about the economic outlook, but many investors were away as trading winds down for the year.
A weaker yen also gave a boost to exporters, such as carmarkers Toyota and Nissan. Shares in Japan Airlines fell sharply on worries that the carrier may seek bankruptcy protection.
The Tokyo Stock Exchange's benchmark Nikkei-225 index rose 3.83 points, or 0.04 per cent, to 10,638.06, the highest finish since August 26 and within striking distance of its 2009 high.
The broader Topix index of all first-section shares added 1.09 points, or 0.12 per cent, to 915.87.
Turnover was relatively low at about 1.57 billion shares.
"There are few buying cues, but there are even fewer selling cues," Takero Inaizumi, head of equities at Mizuho Investors Securities, told Dow Jones Newswires.
Companies with a large exposure to overseas markets were lifted by easing worries about the recent strength of the Japanese currency, as the dollar rebounded to 91.72 yen, up from 91.62 in New York late on Monday.
Toyota Motor added 0.8 per cent to 3,890 yen while Nissan Motor climbed 1.6 per cent to 813 yen.
But Japan Airlines tumbled 8.3 yen to 88 yen after Japanese media reported that a state-backed turnaround body overseeing the carrier's restructuring is considering bankruptcy as one option.
"Investors are selling on fears that the rights of existing shareholders won't be protected," said SMBC Friend Research Centre analyst Mitsuru Miyazaki.
Shares in Sumitomo Chemical Co ended unchanged at 403 yen after the group announced it had begun talks about a possible business tie-up with Australian agrichemical firm Nufarm.
