Market sentiment improved as oil prices fell, easing worries about higher inflation and possible economic disruptions caused by tensions in the Middle East. The drop in crude prices encouraged investors to buy stocks that had declined sharply a day earlier.

Technology and semiconductor-related companies led the gains, supported by continued interest in artificial intelligence and chip manufacturing. Financial firms and large trading houses also recorded solid advances as investors' risk appetite returned.

Even with the rebound, market participants remain cautious as geopolitical tensions and fluctuations in global energy prices could still affect Japan's export-focused economy and market direction in the coming weeks.

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