A notable loser was Advantest Corp, the world's largest maker of chip-testing equipment, which tumbled over 6 percent a day after posting disappointing earnings results.
But insurers, banks and builders extended recent gains amid optimism about Japan's economy. Mitsui O.S.K. Lines Ltd and other shipping firms again drew buying due to hopes for better earnings than expected thanks to growing transport demand.
The Nikkei rose for a third straight session, gaining 22.06 points to 13,417.08. The capital-weighted TOPIX index was up 1.15 percent at 1,423.84.
News late on Wednesday that the US Securities and Exchange Commission had sent GM subpoenas related to the world's biggest auto maker's accounting sent its shares down some 2 percent in after-hours trading and prompted investors in Tokyo to avoid riskier assets such as stocks, analysts said.
"The news apparently helped send the 10-year Japanese government bond yield below 1.5 percent, said Norihiro Fujito, general manager at Mitsubishi UFJ Securities' investment research and information division.
The key Nikkei futures contract went as low as 13,390, giving up earlier gains to 13,500 and prompting arbitrage selling in cash stocks, before ending up 30 points at 13,410. The GM news, however, had little immediate impact on Japanese auto stocks, with Toyota Motor Corp, the world's second-biggest auto maker, rising 0.8 percent to 5,250 yen.
While the news came as the latest blow to GM, which is confronting its biggest financial crisis since a narrow brush with bankruptcy 13 years ago, credit concerns in general remained after Refco Inc, the largest independent US futures and commodity broker, went under this month.
The Nikkei was also weighed down by worries about upcoming earnings announcements from major technology firms.
Sony Corp said after the market closed that its quarterly profit rose 52 percent as pension gains outweighed tumbling TV prices and a sluggish performance in its movie division, but it kept its projection of a full-year loss.
Electronics conglomerate Fujitsu Ltd fell 1.8 percent to 774 yen after it said on Thursday it swung to a first-half profit, but stood by its full-year outlook.
More disappointing, Kyocera Corp, the world's top maker of ceramic casings for microchips, after the market closed announced half-year earnings that fell short of a market consensus and revised down its full-year forecast. Kyocera shares closed down 1.33 percent at 7,400 yen.
Among gainers, Mitsubishi UFJ Financial Group Inc, the world's biggest bank by assets, was up 1.4 percent at 1.44 million yen. Mitsui O.S.K. Lines, Japan's second-biggest shipping firm, was up 3.3 percent at 827 yen.
Top nonlife insurer Millea Holdings Inc closed up 6.9 percent at 2.17 million yen after hitting a lifetime high of 2.18 million.
Trading volume rose to 2.85 billion shares, the highest total since last Wednesday. Advancers outpaced decliners 1,186 to 403.