Picture used for illustrative purpose. File

Tokyo stocks closed higher for a third straight session on Monday on expectations that Japan's next government -- to be formed later this week -- will not make major policy shifts.

The benchmark Nikkei 225 index gained 0.65 per cent, or 152.81 points, at 23,559.30, while the broader Topix index was up 0.88 per cent, or 14.46 points, at 1,651.10.

Dealers were watching the ruling party's leadership election on Monday, effectively deciding Japan's next prime minister.

After the markets closed chief cabinet secretary Yoshihide Suga was named to succeed Shinzo Abe, who announced he will resign due to health problems.

"Investors are hoping that Suga will continue taking stimulus measures," Toshikazu Horiuchi, a broker at IwaiCosmo Securities, told AFP. 

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Dealers also welcomed plans to add Tokyo to a Japanese government domestic tourism campaign intended to boost an economy hit hard by the coronavirus.

"Expectations for expansion in domestic economic activities are growing after Tokyo was added to the government's 'Go To' travel campaign," Yoshihiro Ito, chief strategist at Okasan Online Securities, said in a commentary.

The dollar fetched 106.06 yen in Asian afternoon trade, against 106.10 yen in New York late Friday.

In Tokyo, SoftBank Group soared 8.95 per cent to 6,385 yen after the telecom and investment giant said it was selling British chip designer Arm to US chip company NVIDIA for up to $40 billion.

Toyota advanced 1.30 per cent to 7,047 yen, and Sony rose 0.56 per cent to 8,257 yen, but Uniqlo operator Fast Retailing lost 1.62 per cent to 66,090 yen.

Agence France-Presse