Nikkei inches up on last day of financial year

Tokyo, Mar 31: The Nikkei average ended up 0.08 per cent on Friday, the last day of the financial year, adding 5.9 per cent for January-March, its third straight quarterly gain, as banks rose on profit prospects.

For the full 12 months, the benchmark booked a 46 per cent rise and analysts say it looks set to gain further in the coming months.

''We've had a good year and I expect another good one in the next fiscal year,'' said Masaki Iso, chief investment officer at Yasuda Asset Management Co. Ltd.

''The economy is solid and land prices are growing, which is supporting consumer sentiment and boosting their willingness to take risks,'' he added.

But on Friday, Honda Motor Co. and other recent climbers fell on profit-taking ahead of a key corporate sentiment survey, limiting the market's gains.

Analysts said that as the Nikkei has topped 17,000, investors are wary of pushing prices higher in the short term, especially ahead of the Bank of Japan's tankan quarterly survey of business sentiment for March, to be released on Monday.

''Investors are thinking 'why should I buy now?''' said Yasuo Yabe, director of sales at Meiwa Securities.

A Reuters poll of 25 economists produced a median forecast of plus 23 for the tankan's headline diffusion index (DI) for large manufacturers, compared with a reading of plus 21 in December.

Data released before the start of trade showed that Japan's core consumer price inflation rose 0.5 per cent in February from a year earlier, underscoring a slow and steady recovery from deflation.

The Nikkei rose 14.32 points to 17,059.66, its highest close since August 2000.

The broader TOPIX index rose 0.09 per cent to 1,728.16.

Banks continued their advance from the previous session, when they were boosted after a brokerage raised its profit estimates for eight major lenders.

Shares in Mitsubishi UFJ Financial Group Inc., the world's largest bank by assets, ended up 1.1 per cent at 1.80 million yen, after hitting an all-time high of 1.81 million yen.

Second-ranked Mizuho Financial Group Inc. rose 0.8 per cent to 963,000 yen.

Katsuhiko Kodama, a senior strategist at Toyo Securities Co.

Ltd., said rises in bank shares, some of the most liquid stocks, are lifting the overall market.

''Rises in bank shares will help investors to pocket profits and allow them to unload other unprofitable stocks,'' he said.

Optimism about the economic recovery also helped property shares, with Japan's third-largest property developer Sumitomo Realty&Development Co. Ltd. adding 2.8 per cent to 3,260 yen.

The property sector was the best-performing sector for the year ending on Friday, climbing more than 100 per cent. Other top sectors included steel and brokerage shares, both of which gained more than 80 per cent.

Honda fell 1.5 per cent to 7,290 yen, after hitting a lifetime high in the previous session. Toyota Motor Corp. gave up 0.6 per cent to 6,430 yen.

Sanyo Electric Co. Ltd. ended up 0.9 per cent at 323 yen. Just before the market closed, the struggling electronics maker said it planned to spin off its loss-making semiconductor division on July 1, the latest in a series of restructuring steps.

Other notable technology stocks were NEC Corp. and Nikon Corp.

NEC rose 4.4 per cent to 827 yen after Merrill Lynch upgraded it to ''buy'' from ''neutral''. Merrill set a target price of 1,050 yen for it.

Nikon rose 3.9 per cent to 2,110 yen after it said on Thursday it expects operating profit to rise 70 per cent over the next three years, helped by expanding sales of digital cameras and chip equipment, as well as cost cuts.

After the market closed, Toshiba Corp. said it started rolling out its high definition DVD players in Japan on Friday, becoming the first company to offer the next-generation optical disc players worldwide. It will aim to sell 600,000 to 700,000 of the new machines globally in the year starting on April 1.

Toshiba ended up 1 per cent at 684 yen.

Trade was relatively quiet, with 1.66 billion shares changing hands on the Tokyo exchange's first section, below last year's daily average of 2.07 billion shares. Decliners beat advancers 947 to 619.

REUTERS