A man looks at his watch as he passes an electronic board displaying a graph of currency rates outside a brokerage in Tokyo.

Tokyo shares closed up 0.59 percent Wednesday, shrugging off a North Korean rocket launch, with sentiment buoyed by progress in US fiscal cliff talks and a surge in German investor sentiment.

The benchmark Nikkei 225 index added 56.14 points to 9,581.46, while the broader Topix index of all first-section shares finished 0.66 percent, or 5.22 points, higher at 791.29.

Tokyo investors appeared little concerned about Pyongyang's rocket launch Wednesday morning, despite concerns it would upset regional stability.

“Frankly, it was almost a non-event,” Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities, told Dow Jones Newswires.

“It would have been a different story had Japan attempted to shoot the missile down, or if pieces of it landed in Japan.”

A weaker yen helped buoy exporter shares while investor sentiment also got boost after data Tuesday showed German investor sentiment hit a seven-month high, raising hopes Europe's top economy will dodge recession.

Spain's borrowing costs fell sharply Tuesday in a sale of short-term treasury bills, also boosting eurozone hopes.

In the United States, signs of progress in the fiscal cliff talks lifted confidence that deep spending cuts and huge tax hikes due to come into effect on January 1 can be avoided. If the talks fail, the US economy will likely tip into recession.

And the Federal Reserve's policy committee finishes a two-day meeting on Wednesday, with market expectations running high that the central bank will launch further stimulus to power the world's biggest economy.

Investors are looking ahead to national elections in Japan at the weekend, which are expected to see Prime Minister Yoshihiko Noda's government toppled by main opposition leader Shinzo Abe and his Liberal Democratic Party.

The yen has been weakening recently on speculation Abe will follow through on vows to pressure the Bank of Japan into launching more aggressive easing measures to boost the economy.

In Tokyo stock trading, Canon added 2.60 percent to 3,075 yen, Sony was up 3.09 percent to 833 yen while Fast Retailing, operator of the Uniqlo cheap chic clothing chain, rose 0.76 percent to 19,790 yen.

Nissan was up 0.78 percent to 771 yen after Japanese media reported that the automaker plans to roll out 15 updated or new models of hybrid vehicles over the next few years as it aims to boost its lineup of green cars.

In currency markets, the dollar fetched 82.64 yen from 82.51 yen in New York late Tuesday, while the euro bought $1.2999 from $1.3003, and 107.44 yen against 107.28 yen in US trade. - Sapa-AFP