Investors were also cheered by news that Washington had reached agreements with Indonesia and the Philippines, stoking optimism that other countries will achieve deals to avoid the worst of the US president's levies.

Despite a lack of deals being made leading up to Trump's self-imposed August 1 cut-off date, equity markets have been on the march in recent weeks on optimism that governments will eventually get over the line.

Japan had been one of those yet to sign, despite a string of trips to Washington by trade envoy Ryosei Akazawa, dampening investor sentiment in Tokyo.

But Trump said Tuesday that officials had agreed to a "massive" deal that would include a 15 percent tariff on imports from Japan, down from the previously threatened 25 percent.

Tokyo also managed to cut a deal to reduce tolls on its autos -- a sector that accounts for eight percent of Japanese jobs -- to 15 percent, compared with 25 percent for other countries.

"We just completed a massive Deal with Japan, perhaps the largest Deal ever made," Trump announced on social media.

"Japan will invest, at my direction, $550 Billion Dollars into the United States, which will receive 90% of the Profits."

He did not provide further details on the investment plan, but claimed the deal "will create Hundreds of Thousands of Jobs."

With the deal on car shipments in the bag, Japanese Prime Minister Shigeru Ishiba said: "We are the first (country) in the world to reduce tariffs on automobiles and auto parts, with no limits on volume."

Akazawa wrote on social media: "Mission accomplished."

However, he later said the 50 percent levies on steel and aluminium were not part of the deal.

Traders poured back into the market, pushing the Nikkei up more than three percent to a one-year high thanks to soaring automakers.

Toyota rocketed more than 15 percent, Mitsubishi almost 14 percent and Nissan jumped close to 10 percent.

"With the reciprocal tariff rate at 15 percent, our base case view that tariffs should have a limited direct impact for most industries in Japan is unchanged," said Lorraine Tan Morningstar's director of equity research in Asia.

"The key risk remains the indirect impact of slower global demand given ongoing tariff uncertainty."

- 'Win not clear-cut' -

The yen strengthened to 146.20 per dollar -- compared with close to 148 Tuesday but it lost some weight after a top Bank of Japan official indicated it was not in any rush to hike interest rates.

However, analysts were cautious over the agreement.

Stefan Angrick at Moody's Analytics warned the deal "is unlikely to be the final chapter in a saga that has bruised Japan's economy".

"Japan's apparent 'win' is not that clear-cut; the country faced US tariffs in the low single digits before April and a 10 percent tariff since mid-April. It's unclear when the new tariff rate will take effect," he said.

"It's too early to assess the economic ramifications based on the superficial information available at the moment; the most that can be said at this point is that the 15 percent tariff is worse than what Japan had but better than what was threatened."

Trump also hailed an agreement with Manila that will see the toll on Philippine goods lowered by one percentage point to 19 percent, while tariffs on Indonesia were slashed from 32 percent to 19 percent.

Shares in Manila and Jakarta rallied.

The announcements boosted hopes that other deals could be in the pipeline before next Friday's deadline, though talks with the European Union and South Korea remain elusive for now.

Still, US Treasury Secretary Scott Bessent said he would meet his Chinese counterparts in Stockholm next week for talks, as a separate mid-August deadline approaches for US levies on Beijing to snap back to steeper levels.

Elsewhere in Asia, Hong Kong built on its 2025 surge to hit its highest level since late 2021, while Sydney, Singapore and Taipei, Seoul, Mumbai and Bangkok all enjoyed healthy buying interest. Shanghai was flat.

London started the day in the green with Paris and Frankfurt.

The advances came after a broadly positive day on Wall Street where the S&P 500 hit another peak but the Nasdaq snapped a six-day streak of records.

Eyes are also on the release of earnings from Google parent Alphabet and other tech giants including Tesla and Intel.

- Key figures at around 0715 GMT -

Tokyo - Nikkei 225: UP 3.5 percent at 41,171.32 (close)

Hong Kong - Hang Seng Index: UP 1.3 percent at 25,464.53

Shanghai - Composite: FLAT at 3,582.30 (close)

London - FTSE 100: UP 0.5 percent at 9,066.18

Dollar/yen: UP at 146.90 yen from 146.66 yen Tuesday

Euro/dollar: DOWN at $1.1739 from $1.1755

Pound/dollar: UP at $1.3533 from $1.3532

Euro/pound: DOWN at 86.74 pence from 86.84 pence

West Texas Intermediate: DOWN 0.1 percent at $65.22 per barrel

Brent North Sea Crude: DOWN 0.1 percent at $68.52 per barrel

New York - Dow: UP 0.4 percent at 44,502.44 (close)

dan/dhw

X

Nissan Motor

S&P Global Ratings

GOOGLE

Alphabet Inc.

Tesla

INTEL

Dow