Japan's 225-issue Nikkei average surged 3.5% on Tuesday, with tech shares leading the rally as sentiment got a boost from a weaker yen as traders returned after a public holiday.

The Nikkei average ended the day at the session's peak of 36,232.51, trading higher in the last 40 minutes of trading. It spent much of the day flitting back and forth across the psychological 36,000 level, a level it hadn't breached since Aug. 2.

The broader Topix climbed 2.8%.

Chip-making equipment giant Tokyo Electron led Nikkei gainers by index points with a 6.2% rally. Chip-testing machine manufacturer Advantest was next, advancing 7.7%.

Major exporters Sony Group and Toyota Motor rose 5% and 3.3%, respectively. A weaker yen inflates the value of overseas sales when repatriated.

The Japanese currency declined about 0.3% to ¥147.64 per dollar on Tuesday, extending a 0.4% slide from overnight.

Japanese equity markets were closed on Monday for the Bon holiday.

A surprise hike from the Bank of Japan last month following bouts of intervention from Tokyo earlier in July wrong-footed investors and led them to bail out of popular carry trades, in which traders borrow the yen at low rates to invest in dollar-priced assets for higher returns.

Data on Friday showed that leveraged funds — typically hedge funds and various types of money managers — closed their positions in the yen at the quickest rate since March 2011.

Given the yen’s recent rally, dollar-yen is now more in sync with its yield differential, according to Karsten Junius, chief economist at Bank J. Safra Sarasin.

"Another wave of the yen-funded carry trade unwind will likely push the yen still somewhat higher toward year-end. Yet we do not expect USD-JPY to fall meaningfully below 140," he said.

Investors' focus this week will be on a slew of U.S. economic data that will help sharpen the view on the Federal Reserve's next moves, with markets now evenly split between a 25 or 50 basis points cut at the next meeting in September.

Japanese government sources on Tuesday said parliament plans to hold a special session on Aug. 23 to discuss the central bank's decision last month to raise interest rates.

The special session, to be conducted by the Lower House Financial Affairs Committee, is likely to ask BOJ Gov. Kazuo Ueda to attend, said the sources, who declined to be identified.

The schedule will be officially decided later on Tuesday.

The BOJ surprised markets by raising interest rates to a 15-year high on July 31 and signalling its readiness to hike borrowing costs further on growing prospects that inflation will durably hit its 2% target.

The decision, coupled with U.S. recession fears, roiled financial markets, triggering the Nikkei's biggest selloff since the 1987 Black Monday crash.

The market rout led senior officials from the ruling and major opposition parties to agree to summon Ueda to explain the central bank's decision.