Nikkei ends higher on boost from ex-dividend stocks

Japanese shares closed higher on Monday following bigger appetite for stocks that were set to go ex-dividend this week, although gains were capped due to US-Sino tensions.

The benchmark Nikkei share average rose 1.32 per cent to 23,511.62 and the broader Topix gained 1.69 per cent to 1,661.93. All but two of the 33 sector sub-indexes on the Tokyo exchange traded higher.

Investors took cues from Wall Street's positive finish on Friday when main indexes gained more than 1 per cent, while in Japan, analysts cited demand for index futures by index and mutual funds lifting sentiment a day before the ex-dividend date.

But US-China tensions capped gains after reports the US had sent letters informing companies that suppliers of certain equipment to China's Semiconductor Manufacturing International Corporation must apply for individual export licenses.

Amid the tech-related dispute between the two nations, chipmaker Kioxia Holdings Corp postponed plans for what would have been Japan's largest initial public offering this year.

This triggered a sell-off in Toshiba Corp stocks, which had intended to return most of the IPO proceeds to shareholders, dropping more than 8 per cent in early session before retracing some losses to trade 3.23 per cent lower.

"It has become clear that the US restrictions on China have affected various companies in the semi-conductor industry... but the magnitude of the effect will differ from companies to companies," said Takashi Hiroki, chief strategist at Monex Securities.

Other semi-conductor shares also declined. Tokyo Electron and Advantest Corp slid 1.75 per cent each.

Stocks that outperformed included Nitori Holdings, which edged 0.56 per cent higher after the interior goods company announced upward revisions to earnings forecasts.

Elsewhere, the Mothers Index of start-up firm shares fell 1.62 per cent.