Wednesday close

The Tokyo Stock Exchange closed at a half-day session to mark the end of the year with share prices finishing just lower than the previous close.

The benchmark 225-issue Nikkei Stock Average fell 4.73 points, or 0.03% to finish at 13,842.17 points. On Tuesday, the average closed up 13,784 points, or 1.01%.

A drop in government bond prices and a flurry of profit-taking forced Japanese share prices down, as thousands of brokers snapped up end-of-the-year buys.

"From the outset, Tokyo stocks were down due to profit-taking following yesterday's gains," said a broker from Nikko Securities Co. Ltd, referring to the previous day's 1.0 percent rally.

Some 2,300 traders crowded the floor of the exchange and clapped hands for the last time to mark the last trading day of the year. After April 1999, electronic trading replaces dealing on the exchange floor. "A sharp drop in government bond prices triggered selling among banking shares as investors were concerned that such fall would wipe out banks' unrealized profits," the Nikko Securities broker said.

This month the Japanese government drew up a record-sized budget for next year, worth ¥81.86 trillion ($711.8 bn), and promised 0.5% growth in the world's second largest economy. But 37.9% of this spending, a record amount, will be paid for by government debt, which unnerved many banks which quickly sold off bonds.

"Share prices are likely to move in a weak trend from the new year as concerns will likely remain that yeilds of long term bonds may continue to rise," a Meiko Securities broker said.