Government Action Fuels Rally in Japan

Share prices on the Tokyo Stock Exchange rallied further Friday after the government’s announcement of measures to rescue ailing Japanese financial institutions.

The dollar moved lower against the Japanese yen.

The 225-issue Nikkei stock average rose 582.10 points, or 3.18%, closing the morning session at 15,849.86. On Thursday, the average jumped 617.02 points, or 4.21%, rising above 15,000 points for the first time in eight sessions.

“This rally is very overdue, but people became afraid it was a little overdone,” a Japanese brokerage trader said. “People are very positive about today, but not so sure about tomorrow.”

The Nikkei closed above 15,000 for the first time since Monday of last week. It was up 958.35 points, or 6.70%, from Tuesday, when it closed at a 77-month low of 14,309.41.

Government measures announced Tuesday to help the financial system cope with debt and property problems, plus official talk about helping banks sell off real estate held as collateral, gave the market a boost, mostly on the fact that officials are moving, rather than on the contents of the measures, brokers said.

But the resulting buying was mostly repurchasing of oversold positions and some quick dealer trading. Little fresh or institutional activity was evident, they said.

“This is still not the real thing,” said Paul Migliorato of Jardine Fleming. “Institutions are very quiet, and people are worried about overshooting.”

Sony’s first-quarter earnings were not as weak as feared, which also sparked short-covering, said Toranobu Sugai of Lehman Bros.

But brokers noted the Nikkei has not had a three-day rally since July 2, nor a four-day rally since last October.

Thursday’s turnover was about 300 million shares, against 226 million on Wednesday.