TOKYO, Aug 19 (Reuters) - Japanese shares advanced on Monday after hopes of more stimulus from central banks around the world and steps being taken by major economies such as Germany and China eased immediate concerns about a slowing global economy.
However, the gains were limited as the U.S.-China trade dispute remained a nagging worry for market participants.
The Nikkei share average rose 0.5% to 20,525.45 points, while the broader Topix added 0.4% to 1,491.44 by the midday break.
On Wall Street, all three major stock averages closed higher on Friday as an ebbing bond rally and news of potential German economic stimulus brought buyers back to the equities market.
On Friday, Der Spiegel magazine reported that Germany's coalition government was prepared to set aside its balanced budget rule in order to take on new debt and launch stimulus steps to counter a possible recession.
German stimulus hopes helped the benchmark 10-year U.S. Treasury yield rise from three-year lows, while Japanese government bond yields took their cue from the Treasury market and ticked up on Monday.
Rising bond yields gave a boost to rate-sensitive banks, which were battered badly by sharp drop in bond yields last week, with Mitsubishi UFJ Financial Group climbing 1.1% and Sumitomo Mitsui Financial Group rising 0.9%.
Another rate-sensitive TSE REIT index added 0.3%, extending its winning streak to a seventh day to hit its fresh 12-year highs since 2007.
At the weekend, China unveiled a new benchmark interest rate to be launched on Tuesday to help lower borrowing costs and support the slowing economy. Analysts say the new rate will be lower than the current one, but are divided over the size of the cut.
However, trade fears are still running quite high and weighing on investor sentiment as U.S. President Donald Trump on Sunday said he did not want the United States to do business with China's Huawei..
Other notable movers include FamilyMart Uny Holdings , up 11.6%, after the convenience chain operator said it will buy as much as around 16 million additional shares in Pan Pacific International Holdings through August 2021. Pan Pacific gained 3.1%. (Reporting by Tomo Uetake; Editing by Kim Coghill)