By Hideyuki Sano
TOKYO, Jan 7 (Reuters) - Japanese shares rebounded on Tuesday, tracking overnight gains on the Wall Street, amid relief that there were no escalations in tensions between the United States and Iran.
The Nikkei share average .N225 rose 1.51% to 23,554.27, recovering much of its losses on Monday.
The broader Topix .TOPX gained 1.5% to 1,722.95, already closing the chart gap made during the New Year holidays just in one day in a positive sign for bulls.
The mood calmed a little as there were no new aggression after Iran and the United States traded threats following a U.S. air strike killing a top Iranian commander.
"The markets are hoping that there will be no full-scale military confrontation. The U.S. side probably doesn't want a war in an election year, neither does Iran, which are already hit by sanctions," said Masayuki Doshida, a senior market analyst at Rakuten Securities.
A broad range of shares rallied, with 90% of shares on the main board chalking up gains.
Shares in Zojirushi Corp 7965.T jumped 12.6% to lifetime high after official filing showed its top shareholder changed the aim of its investment in the kettle maker to make management advice and proposals from pure investment.
Investors also flocked to domestic demand-oriented shares, which are perceived to be less vulnerable to external shocks such as further geopolitical tensions in the Middle East.
Sony Corp 6758.T rose 3.5% to its highest levels in 18 1/2 years on hopes of solid earnings while Fujitsu 6702.T closed in on its 2006 peak, riding on hopes of a boost from 5G wireless communication growth.
Recent IPO stocks did well as Japanese retail investors saw a chance for quick gain given the firmness in start-up shares in the past several months.
Space Market 4487.T , which offers online rental space service, rose 2.3%. All of them were listed last month.
The index of the Jasdaq start-up market .NOTC , which has been rising steadily since September, rose 0.87%.
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