Nikkei closed at a two-week high and auto stocks rose

Economy and stock exchange

The benchmark Nikkei Stock Average closed Monday at a two-month high led by auto companies after US President Donald Trump pulled out a threat to impose import duties from Mexico.

The benchmark Nikkei <.N225> was up 1.2% at 2,134.42 points, its highest close since May 28.

Toyota Motor Corp. jumped 1.8%, Honda Motor rose 1.5%, Mazda Motor advanced 1.1%.

Japanese companies have been making cars in Mexico for a long time, exploiting cheap labor and trade agreements and bringing them closer to the United States, the world's largest auto market after China.

On Friday, the United States and Mexico reached an agreement to avoid a customs war and Mexico agreed to a rapid expansion of a controversial asylum program and the deployment of security forces to stem the flow of illegal immigrants from Central America. Trump earlier threatened to impose a tariff starting Monday.

The broader Topix index <.TOPX> was up 1.3 percent at 1,552.94.

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