By Brad Frischkorn TOKYO--Tokyo stocks rose strongly Tuesday as the dollar held steady, while Chinese inflation data provided a measure of reassurance that demand conditions in the region's largest economy remained reasonably robust. The Nikkei Stock Average gained 363.56 points, or 2.6%, to 14,472.90 following the prior day's 1.4% selloff--the large percentage point fall since June 20. Alternatively, Tuesday's rise was the largest since June 28, illustrating the continuing market volatility. The Topix index of all the Tokyo Stock Exchange First Section issues also rose 24.31 points, or 2.1%, to 1,196.89, with 32 of 33 subindexes ending in positive territory. Participation levels were in-line with recent figures, with 2.8 billion shares worth Y2.36 trillion changing hands. "The fact that Monday's negative reaction to S&P's credit downgrade on SoftBank's credit (to junk status) lasted only one session illustrates the broader market's strength," said Tatsunori Kawai, chief strategist at kabu.com Securities. "Alcoa's overnight business results offered decent hope for the whole of the earnings picture, while U.S.-Japan interest rate differentials should keep supporting the dollar, which will limit the severity of Japanese stock market selloffs." The midmorning release of China June consumer inflation data that came in largely within expectations also served to calm jitters over recent figures--such as manufacturing PMI--indicating a likely economic slowdown, said traders. China-related shares largely outperformed the market, with Komatsu up 3.5% to Y2,335 while Hitachi Construction Machinery also added 3.5% to Y2,093. Among major exporters, Honda Motor gained 2.3% to Y3,845, while Fuji Heavy Industries also added 5.4% to Y2,715. Brokerages led financial shares higher, with Nomura Holdings gaining 3.4% to Y816. SoftBank also posted a gain of 1.1% to Y5,740. Shares of Olympus comprised the single-heaviest negative weight on the Nikkei, tumbling 5.4% to Y2,928 after the firm announced a $1.17 billion new share offering after the Monday market close. Suntory Beverage & Food shares had their best day since listing on July 3, adding 3.1% to Y3,375. Shares have risen incrementally in each session of trading thus far, and are now up 8.9% from their Y3,100 IPO price. September Nikkei 225 futures closed up 360 points, or 2.6%, at 14,460 on the Osaka Securities Exchange.

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