Share prices have risen sharply in Japan, one of the few world stock markets open on Christmas Day.

The Nikkei index closed up by 2.5% and at one stage rose by 5%.

The increase came despite industrial production figures showing a steeper decline than expected.

At one stage the Nikkei rose by 5%

Banks saw strong buying interest at the start of trading, following details of the ruling Liberal Democratic Party's financial system stabilisation package announced the previous day.

Buying interest also grew after the Finance Ministry's decision to delay the introduction of tighter regulations on banks, and as speculation increased that the Prime Minister, Ryutaro Hashimoto, may implement additional cuts in the corporate tax rate.

Sentiment also improved on the midnight announcement that the International Monetary Fund and the Group of Seven industrialised nations would provide $10bn in emergency funding to South Korea, brokers said.

Japanese budget

The Japanese government has adopted a 77.7 trillion yen ($598bn) budget for the next fiscal year, with the core general expenditures falling for the first time in 11 years.

Ryutaro Hashimoto hopes to reduce Japan's national defecit

The general expenditures will fall 1.3% to 44.5 trillion yen, reflecting Ryutaro Hashimoto's drive for fiscal reform to reduce huge national deficit.

The overall budget increased a slight 0.4% from the initial budget in the present fiscal year to 77.7 trillion yen, much smaller than the 3.0% rise for this year.

The budget bills, the first compiled under the fiscal reform law enacted in November, are to be submitted to the ordinary session of parliament starting on January 12.

Changes from the draft proposal includes additional spending such as 1.1bn yen for the start-up of an international airport construction in central Japan.

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