Japan's Nikkei share average ended higher on Tuesday, as chip-related heavyweights recovered from heavy losses in the previous session.
The Nikkei closed up 2.17% at 65,416.63. The index fell 3.85% on Monday, its largest one-day loss in three months.
The Nikkei was choppy earlier in the session, inching down as much as 0.16%.
The broader Topix rose 1.14% to 3,896.11.
Chip-making equipment maker Tokyo Electron jumped 8.91% and chip-testing equipment maker Advantest gained 4.34%, becoming the biggest source for the Nikkei's gain.
Meanwhile, technology investor SoftBank Group and fibre optic cable maker Fujikura reversed earlier losses and ended 1.03% and 2.23% higher, respectively.
"Confidence for AI-related shares remains strong, but there was caution for the fast-paced rally in the market earlier in the session," said Kazuaki Shimada, chief strategist at IwaiCosmo Securities.
"Investors might have sold stocks to raise money to buy SpaceX ahead of its initial public offering this week," he said.
The Nikkei crossed above 68,000 to a record high earlier this month on optimism for the growth of AI-related shares. The index has risen nearly 30% so far this year.
Monday's heavy sell-off followed sharp declines in U.S. technology stocks at the end of last week.
Financials rose on Tuesday as the market braced for the Bank of Japan's interest rate hike at its policy meeting next week. Mitsubishi UFJ Financial Group and Mizuho Financial Group rose 0.38% and 1.69%, respectively.
Meanwhile, Uniqlo-brand owner Fast Retailing fell 0.96% to weigh on the Nikkei the most.
Of more than 1,500 stocks trading on the Tokyo Stock Exchange's prime market, 53% rose, 42% fell, and 3% traded flat.
