TOKYO, July 3 (Reuters) - Japan's Nikkei share average jumped on Monday, tracking Wall Street's strong finish on Friday, with sentiment buoyed by a Bank of Japan (BOJ) survey which signalled the domestic economy is on track for a recovery.
By 0145 GMT, the Nikkei index had gained 1.6% to 33,714.03. The broader Topix was up 1.31% to 2,318.64.
"U.S. stock market was strong on Friday after investor confirmed a slowdown of Personal Consumption Expenditures (PCE) index, while the BOJ's "tankan" showed an increase in capital expenditure," said Shuji Hosoi, senior strategist at Daiwa Securities.
"Pension funds finished their sell-off of stocks associated with rebalancing their portfolios, and new money has been injected in the market, which is also a positive cue."
Wall Street's three major indexes advanced solidly on Friday, with the tech-heavy Nasdaq boasting its biggest first-half gain in 40 years as inflation showed signs of cooling.
The BOJ's quarterly "tankan" survey showed Japanese business sentiment improved in the second quarter, as companies expected to increase capital expenditure and projected inflation to stay above the Bank of Japan's 2% target five years ahead.
Machinery makers jumped 3% to become the top performer among the 33 industry sub-indexes on the Tokyo Stock Exchange. Komatsu, the world's second-largest construction machinery maker, rose 2.06%.
Technology heavyweights rose, with chip-making equipment maker Tokyo Electron jumping 3.99%. Chip-testing equipment maker Advantest climbed 4.28% and air-conditioning maker Daikin Industries surged 6%.
Z Holdings, which runs internet firm Yahoo Japan, jumped 5.17%.
Meanwhile, department store operator Takashimaya lost 1.17% to become the worst performer on the Nikkei. Peer Marui Group slipped 0.5%. (Reporting by Junko Fujita; Editing by Varun H K)
