Tokyo Stock Prices End Day at Record High : Nikkei Index Buoyed by Yen, Low Interest Rates

Tokyo stock prices soared Friday to close at a record high on optimism over a strong yen and low interest rates, brokers said.

The Nikkei 225-share index jumped 323.15 points, or 1.15%, to close at a record high of 28,489.57, surpassing an Aug. 4 record of 28,475.68. The index lost 46.36 points on Thursday.

“The market has moved away from concentration in mainly large capital asset stock to some reinvestment, not just trading,” said Craig Chudler, a market strategist with Smith New Court. “Views on the yen have been important and caused a switch.”

A stronger yen reassures investors that Japan will not raise its interest rates soon because this would only push the yen higher and the Bank of Japan does not want that, brokers said. Low interest rates are considered positive for stock prices because they increase the amount of money washing through the economy, spurring growth and making stock investments more attractive than fixed-interest deposits, brokers said.

The dollar has fallen sharply against the yen in recent sessions over concerns about the twin U.S. deficits of trade and budget.

Broad-Based Trading

“This is definitely a different investment pattern. Whether it will continue or not remains to be seen,” Chudler said.

Investors had recently been trading in and out of mostly large capital issues, but buyers gradually warmed up to other sectors this week, brokers said. Financial issues were the backbone of the day’s rise, with some high-technology shares joining in the rally later in the day.

“It’s pretty healthy trading and it’s broad-based,” said a trader at Yamaichi Securities.

Rises led falls by 594 to 314, although volume was rather thin at 900 million shares against 1.2 billion on Thursday, indicating that institutions are not yet full-fledged participants, brokers said.

“After breaking through the resistance level of a record high today, the market may continue to surge upward,” said Tadaaki Uehara, deputy general manager of Wako Securities Co.

“It will be difficult for the Nikkei to reach 30,000 for a while if there is continued buying in domestic demand stock and selling of high techs, but the index could hit 29,000 by the end of the year,” he said.

On the London Stock Exchange, share prices closed sharply lower in heavy trading Friday as the dollar continued its recent slide.

The Financial Times 100-share index fell 23.5 points, or 1.3%, to 1,802.7.