TOKYO, July 2 (Xinhua) -- Tokyo stocks closed slightly higher Thursday as U.S. manufacturing activity rebounding to its highest level in more than a year helped sentiment, although gains were trimmed as daily COVID-19 cases in Tokyo hit a two month high.

The 225-issue Nikkei Stock Average gained 24.23 points, or 0.11 percent, from Wednesday to close the day at 22,145.96.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, added 4.15 points, or 0.27 percent, to finish at 1,542.76.

Investor sentiment here was initially bolstered by U.S. data showing that manufacturing output had increased the most in more than a year, local brokers said.

The Institute for Supply Manufacturing survey showed that 52.6 percent of U.S. companies said output is expanding, rising from May's reading of 43.1 percent and April's slump at 41.5 percent.

Brokers here added that the better-than-expected figures helped allay ongoing fears of more economic restrictions being put in place as COVID-19 cases in the U.S. continue a major resurgence.

Helping U.S. shares' overnight advance and Tokyo stocks' early rise, in addition, were reports that a COVID-19 vaccine jointly developed by German biotech firm BioNTech and Pfizer has shown potential in human clinical trials, market analysts here highlighted.

But stocks erased early gains and swung into negative territory in the afternoon following the Tokyo metropolitan government announcing that COVID-19 cases in the capital had climbed to the highest in two months, marking the seventh straight day that infections have spiked, causing fears of a second wave hitting the capital.

"The growing number of infections is fueling fears about further economic damage and putting a brake on shares' momentum," Toshikazu Horiuchi, equity strategist at IwaiCosmo Securities Co., was quoted as saying.

But automaker issues found favor on hopes for U.S. manufacturing output to continue expanding, while transportation-linked issues rallied on hopes for increased business as countries, including Japan, start to ease travel bans and restrictions in place due to the pandemic, market analysts here said.

Among automakers accelerating, Toyota Motor gained 1.8 percent, while Honda Motor added 1.9 percent. Subaru, meanwhile, ended the day 2.5 percent higher.

All Nippon Airways rose 2.9 percent, while Japan Airlines climbed 1.9 percent, after saying a day earlier that it hopes domestic flights will be fully resumed by October amid recovering demand.

By the close of play, transportation equipment, air transportation and insurance issues comprised those that gained the most, and issues that fell outpaced those that rose by 1,343 to 753 on the First Section, while 73 ended the day unchanged.

On the main section on Thursday, 1.357 billion shares changed hands, rising from Wednesday's volume of 1.184 billion shares.

The turnover on the penultimate trading day of the week came to 2.236 trillion yen (20.820 billion U.S. dollars). Enditem

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