Japan's Nikkei average rallied on Tuesday to end 2003 at an eight-week high as investors snapped up Canon Inc and other blue chips following Wall Street's climb to near the best levels in two years.

Stock dealers conduct the final tradings of the year at the Tokyo Stock Exchange, Dec. 30, 2003. Japan's Nikkei average rallied Tuesday to end 2003 at an eight-week high as investors snapped up Canon Inc. and other blue chips after Wall Street's climb to near the best levels in two years. It was a fitting finish for the Nikkei, which rose 24.5 percent over the year to end a three-year bear market that began in 2000 with the bursting of the dot.com bubble. [Reuters]

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It was a fitting finish for the Nikkei, which rose 24.5 percent over the year to end a three-year bear market that began in 2000 with the bursting of the dot.com bubble.

The Nikkei closed Tuesday's shortened session up 1.68 percent or 176.02 points at 10,676.64, its highest finish since November 5. The broader TOPIX index rose 1.70 percent to 1,043.69, for a gain of 24 percent during the year. Among winners, top mobile phone operator NTT DoCoMo Inc. rose 4.29 percent to 243,000 yen, chip testing device maker Advantest Corp gained 1.8 percent to 8,500 and copier and camera giant Canon put on 3.1 percent to 4,990 yen.

Big banks were also in favor as investors bet economic conditions will be solid again next year. Mizuho Financial Group , the world's largest lending group by assets, jumped 3.5 percent to 325,000 yen, near its high for the year of 329,000 yen.

Market players said bank shares were helped by a survey by business daily Nihon Keizai of 10 major financial institutions in Japan, the United States and Europe showing they expect the global economy to expand by 3 to 4.5 percent in 2004.

"If the global economy can achieve three to four percent growth, the market will probably produce high single-digit returns next year or even 10 to 15 percent," said Hideo Ueki, chief investment officer at UBS Global Asset Management Japan.

"Banks will benefit, with investors willing to take on more risk because banks are leveraged sectors and a proxy of economic activity," Ueki said. "Banks will probably continue to do well into the early part of next year."

Volume came to 718.17 million shares on the first section of the Tokyo Stock Exchange (TSE), up from 585.79 million on Monday morning. Advancers outnumbered decliners 1,207 to 220.

Combined trading volume on the TSE's first and second sections and the Mother's section for start-up firms came to roughly 316 billion shares during 2003, the highest in the postwar era

Japan's securities index ISECU.surged 59 percent in 2003, since higher volumes boost trading commissions, making it the third-best performing sector after iron and steel's ISTEL.84 percent rally and shipping's ISHIP.77 percent run. Investors in Sapporo Holdings Ltd. also had reason to celebrate after Japan's third-largest brewer said on Monday that 2003 sales of its Yebisu brand premium beer were set to exceed 10 million cases for the first time.

Shares in Sapporo closed Tuesday up 4.61 percent at 295 yen.

Many market watchers believe the Nikkei is poised to rise further in the first half of 2004, but could fade in the second half if higher interest rates choke off economic activity in the United States and the effects of tax breaks there begin to wear off.

The rising yen is another worry for investors, traders said.

"The market is factoring in a strong start for equities in 2004. Looking at economic indicators, the conditions appear prime for a solid performance in the first half of the year," said Takahiko Murai, general manager of equities at Nozomi Securities.

"Investors are of course worried about the prospects for a future fall in the dollar, but the market seems to have built up an immunity to a dollar rate around 107 yen," he said.

The dollar was buying about 107 yen in early afternoon compared with its level of 118.7 at the end of 2002.

The Tokyo Stock Exchange will be closed until January 5 for the New Year holiday.

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