Tokyo stocks open higher after Europe markets rally

Tokyo stocks opened higher on Tuesday, encouraged by rallies in major European markets with US markets closed for the Labor Day holiday.

The benchmark Nikkei 225 index was up 0.33 per cent or 75.62 points to 23,165.57 in early trade, while the broader Topix index gained 0.16 per cent or 2.60 points to 1,612.34.

"Japanese shares are seen supported by rallies in major European bourses," senior market analyst Toshiyuki Kanayama of Monex said in a commentary.

Some investors may be taking a wait-and-see approach with US markets closed for the day.

Traders were also watching the beginning of the race to decide Japan's next prime minister through the ruling Liberal Democratic Party's leadership election, Mizuho Securities said in a note.

Three candidates are likely to officially register their candidacy, with Shinzo Abe's right-hand man Yoshihide Suga widely expected to win.

The dollar fetched 106.28 yen in Asian trade, against 106.27 yen in London.

In Tokyo, Uniqlo casual wear operator Fast Retailing was up 1.39 per cent at 66,990 yen, industrial robot maker Fanuc was up 2.20 per cent at 21,095 yen, while chip-making equipment manufacturer Tokyo Electron was down 1.04 per cent at 26,125 yen.

Japan's economy shrank 7.9 per cent in April-June from the previous quarter, more than the initial 7.8 per cent in preliminary data, the cabinet office said 10 minutes before the opening bell.