As a rush of first-quarter earnings from Japanese firms winds down and with no major domestic economic indicators due, investors will focus on key economic data in the United States for clues to any more interest rate rises in Japan's biggest trade partner and the impact on financial markets.
Broadcaster TV TOKYO Corp's market debut on Thursday is also on the market's radar screen as it is expected to be a gauge of investors' sentiment towards initial public offerings, whose popularity is seen as running out of steam.
"Given the fewer number of key corporate earnings left and no major economic data planned, we cannot help but look to the US markets to find trading incentives," said Tsuyoshi Nomaguchi, a senior strategist at Daiwa Securities.
Along with US payrolls data for July, the Institute of Supply Management (ISM) manufacturing index, due out Tuesday, is also eagerly awaited as a strong outcome could boost confidence in the US economy, cheering the mood in the US and Japanese markets.
Traders expect the benchmark Nikkei average to trade between 11,000 and 11,600 this week. It ended Friday's session up 1,88 percent at 11,325.78.
A tangled take-over battle in the nation's banking industry will also be in the limelight after Sumitomo Mitsui Financial Group (SMFG), Japan's third-largest bank, on Friday made an offer for UFJ Holdings, the smallest and weakest of Japan's top four lenders.
UFJ is already in take-over talks with second-ranked Mitsubishi Tokyo Financial Group Inc (MTFG) that would create the world's biggest bank with assets of $1.7 trillion. UFJ rejected SMFG's offer to meet on Friday.
Meanwhile, analysts said technology stocks would remain under pressure this week on lingering worries about the sector's business outlook, but stability on Wall Street might encourage hungry buyers to chase blue chips with bright earnings prospects.
US blue chips climbed for the fourth day in a row on Friday, but gains were capped by another surge in oil prices while economic reports cast doubt on the economy's strength.
TV TOKYO's IPO comes after Sosei Co Ltd, a drug development firm, debuted on July 29 but failed to rise above its offer price, stoking concerns among individual investors that a winning streak in the IPO market may soon end.
Until now, all of the more than 120 companies that have floated their shares in Japan since last September had made their market debut at a level higher than their IPO price thanks to increasing popularity among individual players.