Tokyo stocks end 0.67% higher

The benchmark Nikkei 225 index recovered from early losses to end 70.51 points higher at 10,578.57, while the broader Topix index of all first-section issues finished up 0.82 percent, or 7.17 points, at 879.05.

As the yen resumed its decline, shares in major exporters and financial firms cast off early losses, with Toyota ending up 1.59 percent at 4,165 yen and investment bank Nomura jumping 3.52 percent to 500 yen.

"The yen's resurgence was not something unexpected after falling so much over such a protracted period," Yoshihiro Okumura, general manager at Chibagin Asset Management, told Dow Jones Newswires.

"The market expects that it will resume its weakening trajectory. At this point, it's more a question of how much further it will fall than how much it will rebound."

A stronger yen hurts Japan's exporters by making their products more expensive overseas.

In forex markets, the greenback was changing hands at 87.46 yen, up from 86.97 yen in New York Tuesday afternoon as Japanese importers and retail investors bought the US unit.

The euro bought 114.46 yen from 113.75 yen in US trade, while the single currency fetched $1.3087 from $1.3079 after weak economic data from Europe.

In Tokyo stock trading, defence contractors rose after news Japan plans to spend an extra $2.1 billion on beefing up its military over the next few months.

Mitsubishi Heavy Industries, Japan's biggest military contractor, jumped 4.98 percent to 442 yen with Toshiba rising 2.10 percent to 341 yen.

Shares in mobile carrier Softbank, which announced late last year its $20 billion takeover of Sprint Nextel, dropped 2.09 percent to 3,040 yen after US satellite broadcast carrier DISH Network made a bid for Clearwire.

The bid topped a Sprint Nextel offer for the wireless broadband firm seen as a key part of the Softbank deal.

Japan Airlines slipped 0.39 percent to 3,765 yen after one of the carrier's Boeing 787 Dreamliners was grounded in Boston Tuesday following a fuel spill, one day after another plane of the same type suffered a fire.

Tokyo Electric Power tumbled 2.33 percent to 209 yen and Kansai Electric was down 1.86 percent to 895 yen.

The falls came after the Nikkei business daily said Japan's nuclear watchdog was mulling tough safety measures that could cost the utilities hundreds of millions of dollars to bring reactors into safety compliance.