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Tokyo shares end 2006 up 7 percent for 4th year of gains

Tokyo shares end 2006 up 7 percent for 4th year of gains

Japan's main stock index ended a turbulent 2006 with a 7 percent gain for the year, logging its fourth straight year of growth despite an early sell-off sparked by an Internet startup scandal and a midyear slump over concerns of a U.S. economic slowdown.
The benchmark Nikkei 225 stock index edged up 0.01 percent from Thursday to close at 17,225.83 points on the Tokyo Stock Exchange _ the index's highest close since early May, and a 6.9 percent rise for the year.
Friday's finish also marked the fourth straight year of growth and the highest year-end close since 1999. The broader Topix index, which includes all shares on the exchange's first section, rose 2.16 points, or 0.12 percent, to 1,681.07 points on Friday, a 1.90 percent gain for the year.
The year has been a turbulent one for Japanese markets. A securities fraud scandal involving Internet startup Livedoor Co. in January sparked a frenzied sell-off that sent technology shares plunging, and forcing the Tokyo bourse to shorten trading hours because it could not handle the surge in trading volume.
Individual investors, who had helped raise the Nikkei index 40 percent in 2005, were especially spooked by the investigations against the popular startup. The company and its former top executives, including founder Takafumi Horie, are on trial in Tokyo for alleged securities law violations.
"The Livedoor fiasco zapped steam from the market, leaving many individual investors away from the market," said Eiji Kinouchi, an analyst with Daiwa Institute of Research in Tokyo.
In April, the index surged to 5 1/2-year highs as foreign investors snapped up blue chip exporters like autos, real estates and select banks on signs the world's second-largest economy was recovering.
Japanese growth has reported its longest expansion since World War II, with land prices rising for the first time in over a decade and companies booking record profits. Deflation _ the continuous spiraling down of prices that has depressed wages, profits and economic activity _ was declared all but dead.
But fears of inflation and rate hikes in the United States pummeled shares midyear, pressuring the index down 13 percent in June from the year's open. Both U.S. and global stocks were hurt by concern that rising prices would trigger interest rate hikes, making capital more expensive for companies seeking to expand.
Investors were also worried that U.S. Federal Reserve Chairman Ben Bernanke might raise rates so high in his fight against inflation that the economy would suffer, hurting demand for Japanese exports.
The arrest in June of high-profile fund manager Yoshiaki Murakami over alleged insider trading charges added to market jitters.
Wall Street has since rebounded on a softened stance by the Fed, which has left rates unchanged in its last four meetings. The Dow Jones Industrial Index surged past the 12,500 mark for the first time this week, and is heading toward double-digit gains for the year.
But in Tokyo, the Bank of Japan's decision in July to raise a key interest rate for the first time in six years has stinted the market's recovery, analysts say.
"The index's uptrend was curbed by the tightening of monetary policy by the Bank of Japan earlier this year," said Daiwa's Kinouchi.
Looking ahead, Tokyo shares were expected to remain "on a moderate uptrend" amid expectations the government will announce market-friendly policies leading up to elections for parliament's upper house in July, said Yutaka Miura, a senior technical analyst with Shinko Securities Co.
The Tokyo Stock Exchange will be closed for the New Year holiday until Jan. 4, when it will open for a half-day of trade. Full-day trading resumes on Jan. 5.
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Associated Press writer Kozo Mizoguchi contributed to this report.


Updated : 2020-12-02 11:59 GMT+08:00