The Nikkei 225 average rebounded Tuesday from five-week lows to close sharply higher as cyclical stocks rose on short-covering, following a sell-off the previous day driven by fears of a sharp global economic slowdown.

With the end of the business year looming this Sunday for the majority of listed Japanese companies, the market was also underpinned by investor purchases of stocks before they went ex-dividend later in the day.

The Nikkei ended 2.15 percent higher at 21,428.39 after recording its biggest drop since late December on Monday.