Feelgood factor fails to stir Japan

THE feelgood factor has suddenly returned to

The Nikkei 225 Average drifted down 26.4 points to close at 10,595.44 although the more widely based Topix index managed a modest mid-morning gain. With many other Asian markets closed for holidays, selling of technology stocks on concerns that the recovery for the sector remains over the horizon centred on Taiwan, where the Weighted Average dived almost 4%. Big falls in technology stocks took the index down 202.49 points to 4951.22.

Elsewhere, analysts and economists sifted through the tea leaves of the Tankan survey to assess what its results foretell for Japan and other Asian economies. The BoJ's poll of more than 8,000 executives showed the first net gain in confidence in almost two years, surprising most observers. Optimism was based on a continuance of the surge in exports.

Doubts that this outlook will prove correct were fed by the fact that the results were based on the yen remaining at a level of 126 to the US dollar. It has already soared well above that figure, and was trading at about 119 to the greenback today.

While many domestic-centred Japanese stocks were lifted by the Tankan, with banks up by as much as 3%, and Nippon Steel gaining a similar amount, shares in exporters continued to languish. Reports that the rise in the yen will push top consumer electronics group Sony back into the red this year saw the company's stock tumble almost 3%.

A big push into Asian markets by Australia's top telecoms group, Telstra, lifted its shares in Sydney. The company is taking full control of the CSL mobile phones group in Hong Kong by buying out former partner Pacific Century CyberWorks' 40% stake for US$614m (£400m).

With the Hong Kong market closed for the fifth anniversary of its handover to China, local reaction will have to wait until tomorrow, although analysts say the deal looks a good one for both sides.

PCCW will get much needed cash to reduce its burgeoning US$5bn of debt, which has kept the share price at long-term rock-bottom lows, while Telstra advances its ambitions to expand into Asia.

The Aussie group's stock rose more than 1%, helping the All Ordinaries index to a gain of 12.3 points at 3175.5 at the close. Stronger media stocks in New York on Friday brought some respite to the hammering recently being handed out to News Corporation shares, which jumped more than 4% today.

Singapore technology stocks also wilted and the Straits Times index fell 9.68 points to 1543.3. The bears were back in the prowl in Malaysia on concerns about the country's economic recovery, and the Kuala Lumpur Composite index dipped five points to 720.44. In Jakarta Indonesia's Composite index lost 7.19 points to 497.82. Markets in Thailand and South Korea were closed for holidays.

Prices and indices in this section are supplied from various sources and calculated at different times and may not always match those listed in the tables.