TOKYO (AP) _ Tokyo stock prices rebounded in early trading Tuesday on optimism the Japanese government will come up with new steps to boost the economy. The U.S. dollar fell against the yen.

The Nikkei Stock Average rose 239.26 points, or 1.85 percent, to 13,187.38 in the first 30 minutes of trading.

On Monday, continued worries about the health of Japan's economy sent the Nikkei down a sharp 275.57 points, or 2.08 percent. It closed at 12,948.12, the lowest closing level since Jan. 30, 1986, when it finished at 12,949.04.

The dollar bought 134.16 yen in early trading Tuesday, down 1.60 yen from late Monday in Tokyo and also below its level of 134.25 yen in New York.

The market was encouraged by local news reports that Prime Minister Keizo Obuchi's government will come up with a new package of measures to bolster the economy as early as early next month.

The broader Tokyo Stock Price Index of all issues listed on the first section was up 7.47 points, or 0.75 percent, to 1,004.16. The TOPIX closed down 17.33 points, or 1.71 percent, the day before.

Tokyo's rise came on the heels of volatile trading on Wall Street where the Dow Jones industrial average rallied back from an afternoon deficit of 232 points to close Monday's session 58.45 points lower at 7,726.24.

On the foreign exchange market, the dollar moved lower following weakness in New York, where it fell after finance ministers from the world's major economies failed to offer concrete steps at their weekend meeting to relieve global financial turmoil.

Meanwhile, the yield on the 10-year Japanese government bond rose to 0.750 percent from Monday's finish of 0.730 percent, driving its price down to 109.49 yen from 109.69 yen.