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Japanese shares rose and the yen eased after a report on Tuesday said Prime Minister Shinzo Abe is considering a corporate tax cut as a way to offset the impact of a planned two-stage increase in the sales tax.
Abe is trying to spur growth and pull the world's third-largest economy out of 15 years of deflation with fiscal and monetary expansionary policies.
The Nikkei newspaper quoted government sources as saying Abe has called for a study on lowering the corporate tax rate as a way of easing the burden on Japanese companies and attracting foreign investment.
"The media report on Abe's move to consider lowering the corporate tax is positive for the stock market," said Mitsushige Akino, a fund manager at Ichiyoshi Asset Management.
Tokyo's Nikkei share average climbed 1.7%, rebounding after it fell to its lowest since end-June following Monday's GDP data, to break above its 100-day moving average.
The yen slipped 0.4% to 97.265 yen to the dollar, pulling further away from a seven-week high of 95.810 touched last week.
Against a basket of major currencies, the dollar was up 0.2%, extending gains into a third day in anticipation that U.S. data will point to the Federal Reserve rolling back its monetary stimulus programme sooner rather than later.
Asian shares as measured by MSCI Asia-Pacific ex-Japan index dipped 0.1%, pulling back from a two-week high reached on Monday, while South Korean shares gained 0.5%.
In the commodities markets, copper prices added 0.5% to trade above $7,280 a tonne, after slipping 0.3% on Monday, while gold eased 0.3% after it had surged 1.6% on Monday on strong Chinese demand.
Brent crude prices edged up 0.1% to just above $109 a barrel, extending the previous session's 0.7% rise to a one-week high on concerns over supply disruption from Libya.
