Japan's shot in arm for Nikkei

AMID growing belief that Japan's economy has turned the corner,

Traders are reporting that big Western institutions are switching funds back to Asia, away from the scandals and uncertainties of the US and Europe.

As Japanese investors bet that the government's latest index of leading indicators, due today, would point to a fifth consecutive month of economic growth, the Nikkei 225 jumped 214.03 points before settling at 10,826.09, a gain of 193.28 points at the close.

This will be good news for Japan's small investors, who have been enthusiastic bargain-hunters in recent months. Latest figures from the Tokyo Stock Exchange show that retail investors bought a net 400bn yen (£2.2bn), their biggest contribution since 1990. They have also been encouraged by the ending of interest rate agreements, which reduced the return on bank deposits.

With Wall Street and Nasdaq closed on Thursday, a lack of firm leads kept trade thin in Tokyo, and despite the heavy surge in the Nikkei some analysts warned that much of the bounce as due to continued technical factors, rather than solid buying.

Investors snapped up stocks of domestic-linked groups, as the strength of the yen continued to put a question mark over the profits of big exporters.

Despite the burden of a strong currency, motor giant Toyota today told Bloomberg that it expected to build on last year's profits in the current year. Demand for its new range of cars was strong enough to overcome any price increases, according to the group's directors. Technology stocks, hammered during the big June shake-out which brought the index close to 10,000, were also among today's biggest gainers, and also led makers in South Korea and Taiwan further back from the cliff they fell down last month.

An upgrading of its growth forecast from 5.7% to 6.5% for the current year by the Bank of Korea also helped the Kospi to a 25.27 jump to 794.01, a 3.3% gain.

That rate of growth will make South Korea Asia's fastest-growing economy this year, a prospect which encouraged buyers into domestic steelmaking stocks as well as chipmakers. Taiwan stocks also bounded ahead. The Weighted Average rose 110.21 to 5241.01, and seems likely to move back into the black this year in US dollar terms.

Hong Kong stocks continued to make modest advances for the third day running, and the Hang Seng index put on 25.57 points to 10791.15. Growing enthusiasm among London brokers for HSBC Holdings led shares of the bank in Hong Kong up 50 cents to HK$90.25. In Sydney the All Ordinaries index rose by 7.7 points to close at 3146.3 due to some relative strength among banks which offset a general slide in other blue-chips.

The Straits Times index in Singapore bounced up 35.71 points to 1634.46, as investors picked up undervalued technology stocks.

Other South-East Asian markets gained some encouragement from the region's ebullience. Malaysia's Kuala Lumpur Composite rose 1.47 to 743.02 and Thailand's SET index was 2.2 points better at

400.01. Indonesia's Jakarta Composite index added 3.77 points at 492.49.

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.