Nikkei on track for biggest daily gain since June 2013 on upbeat US data, GPIF

The weaker yen lifted exporters such as Toyota Motor and Honda Motor

Japan's Nikkei share average surged 3.3% on Monday and was on track to post its biggest daily rise in more than a year as investors took heart from upbeat US data and as the weaker yen lifted exporters such as Toyota Motor Corp and Honda Motor Co.

Also underpinning the market was news that Japan's $1.2 trillion public pension fund will likely raise its allocation to domestic stocks to about 25%.

People familiar with the process told Reuters that a weighting in the middle of the 20-30% range is the main proposal for the coming reallocation and is under final discussion within GPIF.

The Nikkei share average rose 486.04 points to 15,018.55 by the midday break, recovering most of the losses posted last week.

Upbeat US consumer sentiment gave relief to investor sentiment and lifted risk appetite. The Thomson Reuters/University of Michigan index of consumer sentiment unexpectedly rose in early October to its highest level since July 2007. Separate data showed groundbreaking for new homes rose more than expected last month.

Traders said investors were scooping up recently battered stocks after the Nikkei tumbled 5% last week on concerns about faltering global growth and the stronger yen.

"Selling in some of the stocks was overdone. Investors are buying them on the dips," a trader at a Japanese brokerage said.

But some analysts remained cautious, and said any rebound may be short-lived.

"With Halloween just around the corner, the market was spooked by 'ghosts' and these ghosts will probably stick around longer," said Hiroyuki Nakai, chief strategist at Tokai Tokyo Research Center, citing persistent concerns about the sputtering European economy, worries about what could happen after the US Federal ends tapering and the Ebola epidemic.

Toyota jumped 5.0%, Honda soared 3.1% and Panasonic Corp surged 3.8% after the dollar rose 0.2% at 107.18 yen, putting further distance between a five-week low of 105.90 hit the previous week.

NEC Corp rose 4.9% after the Nikkei business daily reported that its operating profit for the April-September period was likely to be about 20 billion yen, compared to just shy of 400 million yen in the previous year.

The broader Topix jumped 3.5% to 1,217.91, and the new JPX-Nikkei Index 400 gained 3.5% to 11,083.19.