Stocks closed slightly higher Wednesday after cutting earlier losses on the back of expectations for improved corporate earnings reports.

The Nikkei 225 average gained 27.43 points to close at 17,795.73. On Tuesday, the key market gauge surged 299.78 points.

The Topix finished up 3.54 points at 1,429.92, after rising 24.30 points the previous day.

The TSE opened lower following the yen’s ascent in early morning trading and weaker overseas markets Tuesday. European and U.S. equities fell back, weighed down by sluggish earnings reports from multinational companies. Weaker than expected economic data in the United States also led to the plunge on Wall Street, brokers said.

After the initial selling ran its course, however, Tokyo stocks wiped out their losses by the middle of the morning session and mostly maintained their strength the rest of the day.

Investors moved to buy on dips thanks to strong expectations for improvements in earnings reports from Japanese businesses this week, brokers said.

In addition, the yen’s weakening in the afternoon underpinned the market.

On the back of lower crude oil prices and the weaker yen, domestic corporate earnings for October-December are expected to be solid and export-oriented companies’ earnings estimates for the current quarter are likely to be revised upward, a bank-affiliated securities firm official said.

“Tokyo stocks firmed despite the fall in the U.S. market simply because falling crude oil prices and the higher dollar, which have eroded the earnings of some major U.S. firms, are not negative for a majority of Japanese companies,” said Hideyuki Suzuki, head of the investment market research department at SBI Securities Co.

In addition, the market was supported by growing expectations that the U.S. Federal Reserve will not make comments on an interest rate hike in its statement to be issued after a two-day policy-setting meeting through Wednesday, Suzuki added.

Another online securities firm official said investor sentiment started improving as concerns over the European economy has retreated, if not erased, after key events in the region ended without causing significant market turmoil.

Rising issues outnumbered falling ones 1,237 to 505 in the first section, while 120 issues were unchanged.

Volume increased to 2.312 billion shares from 2.186 billion Tuesday.

Airlines, such as ANA and JAL, marine transportation firms and paper and pulp producers saw sharp rises.

Sony climbed 2.73 percent as hopes grew for a recovery in the electronics maker’s earnings after a news report that it will shed an additional 1,000 jobs at its smartphone operations.

Bic Camera surged 5 percent on growing expectations that the consumer electronics retailer will benefit from an increasing number of foreign visitors to Japan, brokers said.

On the other hand, automakers Honda, Mazda and Toyota were downbeat.

U.S. machinery maker Caterpillar’s sluggish earnings report pushed down construction machinery maker Komatsu, market sources said.

In index futures trading on the Osaka Exchange, the key March contract on the Nikkei average added 150 points to close at 17,850.