Nikkei holds on to 10,000 advantage

JAPAN'S Nikkei 225 Average moved back up through 10,000 today as investors ignored revised figures showing last year's economic performance was even grimmer than had been reported.

Instead, sentiment was buoyed by a firm promise on deflation delivered by Prime Minister Junichiro Koizumi last night. After failing yesterday to hold the headline-grabbing 10,000 figure, today the index moved up 112.74 points to close at 10,081.09.

Other Asian markets bustled back to business after the extended Lunar New Year holiday. Confidence was bolstered by good retail sales figures from the US indicating that the economic decline had bottomed, holding out the promise of growing demand for regional exports.

Output of Japanese manufacturers in December improved only 1.5% over November, against earlier reports of 2.5%, leaving total output for the year down 7.9%, the worst since 1975. Although Koizumi produced no concrete plans of his own yesterday, he ordered drastic reforms that included tackling bad loans, stabilising the financial system and reviving the financing of smaller companies, as well as finding ways to ease monetary policy.

The call for action was seen as way of presenting President George W Bush with a positive progress report when the two meet on Monday in Tokyo.

Japanese semiconductor-related companies and other electronics manufacturers bounced on prospects of better profits, which were supported by a confident earnings forecast from the giant Tokyo Electron chipmaking equipment group, whose shares surged more than 10%.

South Korean stocks bounded ahead on hopes that negotiations between Hynix Semiconductor and the US Micron chip giant will finally result in an alliance.

Hynix stock gained almost 3%, and with similar gains among creditor banks of the group, the Kospi index surged more than 5% after its three-day break. By noon it had added 37.63 points to 777.29.

South Korean newspapers reported that Micron was prepared to pay US$4 billion for part of Hynix's memory production, creating the biggest chipmaking combine in the world.

Another welcome rescue mission for an ailing Korean company has been mounted for Hyundai Motor by DaimlerChrysler, which is reported to be ready to take a half stake in one of the motor group's local plants. The shares soared more than 7% on the news.

Job figures which showed that the Australian economy was rattling along at a faster pace than expected helped share prices close at new records. The All Ordinaries rose 72 to 3487, led by resource stocks.

A bullish new year message from Singapore's Prime Minister brought investors back from their holiday in buying mood and the Straits Times index rose 4 points to 1744.6.

Banks led the gains on predictions that gross domestic product will grow by between 1% and 3% this year.

Bank stocks continued to power Thailand's SET index, which put on 2.6 points to 364.63, Malaysia's Kuala Lumpur Composite rose 2.59 points to 713.51, while in Indonesia the Jakarta Composite index firmed 3.06 to 439.85. Hong Kong and Taiwan remained closed.

Prices and indices in this report are from various sources and calculated at different times and may not always match those listed elsewhere on the site.