Japanese shares staged a mild recovery on Tuesday, sidestepping a historic rout on Wall Street overnight, with suspected buying by the Bank of Japan and public pension funds lending broad support.

But overall sentiment was fragile, as lockdowns in Europe and the United States to combat the spread of the coronavirus fanned fears of further economic pain from the epidemic that has battered global financial markets.

The benchmark Nikkei average closed 0.1% higher at 17,011.53 in choppy trading, having touched its lowest since November 2016 earlier in the session.

The Nikkei's volatility index, a measure of investors' volatility expectations based on option pricing, fell 7.3% to 56.27, just below Monday's nine-year peak of 60.86.

The broader Topix advanced 2.6% at 1,268.46, after earlier falling to 1,199.25, its lowest since June 2016.

Although the mood was sober as Wall Street stocks saw their worst day since 1987, hopes that the BOJ will buy more Exchanged Traded Funds (ETFs) supported the broader market's move, traders said.

The BOJ pledged on Monday to buy ETFs "aggressively" at an annual pace of up to 12 trillion yen ($113 billion), double the previous amount, until markets stabilise.

"I suspect the BOJ is buying ETFs this afternoon," said Takehiko Masuzawa, head of sales trading for Japanese clients at Macquarie Capital Securities.

Market players said the Government Pension Invest Fund (GPIF) and other public pension funds could also have bought stocks to rebalance portfolios following recent sell-offs.

All but two of the 33 sector sub-indexes on the Tokyo Stock Exchange traded higher, with paper and pulp, electricity and gas and fish and forestry being the top three performing sectors.

As more and more people stay home to slow the spread of the coronavirus, game companies and food makers shone, with Nintendo Co Ltd jumping 5.9%, while Nichirei Corp and Yamazaki Baking Co Ltd advanced 3.7% and 9.9%, respectively.
On the downside, Nikkei heavyweight Fast Retailing Co Ltd slumped 4.8% after the operator of Uniqlo clothing stores said it will temporarily close all 50

Uniqlo outlets in the United States due to the epidemic.

Elsewhere, Japan's top oil and gas company Inpex Corp slid 4.4% after crude oil futures fell below $30 a barrel on Monday.

($1 = 106.3600 yen)

Reuters