Japan's Nikkei stock average jumped 3.2 percent on Tuesday, with Honda Motor Co and other exporters gaining after the yen retreated against the dollar.

Shares of high-tech stocks such as Advantest Corp surged in the wake of gains in their U.S. peers.

Bank shares rose as well, with top bank Mitsubishi UFJ Financial Group -- which announces earnings later on Tuesday -- up 6 percent at 627 yen.

Market analysts said the Nikkei's climb was a natural recovery in the wake of Monday's 2.4 percent fall, which many had attributed to profit-taking set off by fears about the spread of the H1N1 flu virus in western Japan.

Basically the flu situation has now been factored in by the market, which is rising today on short-covering and a sense that yesterday's selling was a bit extreme, said Hideyuki Ishiguro, a supervisor at the investment strategy division of Okasan Securities.

U.S. shares rose as strong results from U.S. home improvement retailer Lowe's raised hopes the recession is easing, sparking buying of sectors aligned with economic growth such as banks, energy companies and retailers.

Gains in the Nikkei were likely to be capped before key economic indicators, with U.S. April housing starts later on Tuesday and Japan's first-quarter gross domestic product data on Wednesday, as investors wait to see if recovery in the global economy will keep pace with recent stock market rises.

The Nikkei gained something like 34 percent from March 10 to May 11, so a bit of a correction was only natural given the fact that the fundamental economy still isn't that strong, said Hiroichi Nishi, general manager at the equity division of Nikko Cordial Securities.

Now the market will look upward while closely watching economic indicators.

The benchmark Nikkei gained 279.22 points to 9,317.91, while the broader Topix rose 2.5 percent to 881.03.

Exporters were among the biggest boosters of the Nikkei as the dollar held its own against the yen after climbing from a two-month low near 94.50, buoyed by a stocks rally that revived risk appetite.

The dollar was trading at 96.31 yen.

Canon Inc surged 6 percent to 3,340 yen, becoming the biggest contributor to the Nikkei 225. Honda gained 2.8 percent to 2,755 yen and Toyota Motor Corp rose 4.5 percent to 3,720 yen. Sony Corp gained 5.2 percent to 2,545 yen.

High-tech shares powered higher after the Philadelphia Semiconductor Index climbed 3.7 percent.

Advantest Corp rose 6.4 percent to 1,665 yen, TDK Corp climbed 4.7 percent to 4,420 yen and Kyocera Corp gained 2 percent to 7,520 yen.

(Reporting by Elaine Lies; Editing by Chris Gallagher)

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