Japan reversed earlier losses and led gains in Asia on Wednesday, as news that President Barack Obama will nominate Janet Yellen as Federal Reserve chairwoman gradually trumped concerns over a partial government shutdown in the U.S.

Asia initially took its lead from the U.S., where Wall Street fell Tuesday as the stalemate in Washington fueled fears that the world's largest economy might breach the federal debt ceiling, causing the Treasury to default on debt. Mr. Obama warned Tuesday of "economic chaos" if the U.S. fails to pay its bills.

But for the second day in a row, Asian stocks managed to shake off some of their earlier weakness, with most markets moving into positive territory or close to the breakeven point after The Wall Street Journal reported that Mr. Obama plans to announce later in the day that he is nominating Federal Reserve Vice Chairwoman Janet Yellen as its new leader.

Seen as a monetary policy dove, Ms. Yellen is considered more likely to maintain the Fed's current stance, which may provide relief for Southeast Asian markets under pressure recently from fears that the Fed could change course.

Japan made the biggest turnaround as the dollar pushed back against the yen, with the Nikkei ending up 1% at 14037.84. The Japanese currency weakened to ¥97.34 to the dollar compared with ¥96.87 late Tuesday in New York.

Singapore's Straits Times Index was last up 0.3%, Indonesia's JSX added 0.4% and Australia's S&P/ASX 200 reversed earlier weakness to post a less than 0.1% gain to 5153.00.

The reaction to Ms. Yellen's nomination "is remarkably less marked than when Lawrence Summers pulled out of the race," said Nick Verdi, currency strategist at Barclays.

The International Monetary Fund also weighed down sentiment after it cut its international growth forecast Tuesday to 2.9%. A weakening outlook for emerging markets like India and China drove the revision.

Stocks in China were mixed, with the Shanghai Composite up 0.6% at 2211.77, adding to the strong gains in the previous session, while Hong Kong's Hang Seng Index dropped 0.6% to 23033.97.

The next major economic point for Asia will be Chinese data, with trade and inflation numbers scheduled for release over the weekend and early next week. Markets will be looking for more signs of an economic recovery.

In Tokyo, Mizuho Financial Group lost 1% after its chief executive said Mizuho Bank's former head had received reports about loans to people connected to organized crime--contradicting earlier remarks by bank officials who said management hadn't been informed.

Also in Japan, Honda Motor rose 1.9%, outperforming the broader market, after its new car sales in China for September more than doubled on year, recovering from a fall caused by a territorial dispute between Japan and China.

—Anjani Trivedi contributed to this article.

Write to Daniel Inman at daniel.inman@wsj.com