The Nikkei average closed at its lowest level since Summer 1995 on Monday as the Tokyo stock market was hit by seasonal sluggishness and fears of further corporate failures.

After dropping 3.25% on Friday the Nikkei Stock Average fell 27.38 points, or 0.19%, on Monday to close at 14,775.22.

However, the broader Tokyo Stock Price Index of all issues listed on the first section of the Tokyo Stock Exchange rose 4.28 points, or 0.37%, to 1,147.87. It had closed down 18.64 points, or 1.60%, on Friday.

Trading on Monday was thin due to the lack of investors in the market ahead of the extended New Year holidays, which begin after a half-day of trading on Tuesday.

Uncertain times

The recent string of Japanese corporate bankruptcies also played a part. Some investors sold stocks amid worries that more companies faced insolvency in the coming months, traders said.

Among companies which have collapsed recently are Yamaichi Securities, Japan's fourth-largest brokerage, and Nitto Kogyo, a major golf course management firm which applied for a court-mediated settlement with creditors last week.

Meanwhile, the dollar edged lower against the yen in Tokyo following comments by senior finance ministry official Eisuke Sakakibara that Japan would take decisive action to support its currency.

"We are ready to intervene in such a way that it will surprise the markets," said Mr Sakakibara, the ministry's Vice-Minister for International Affairs.

The US dollar bought 130.13 yen in mid-afternoon trading, down 0.11 yen from late Friday and also below its late New York rate of 130.41 yen.

Hong Kong stocks closed sharply higher on Monday, mainly due to large property gains.

The Hang Seng Index climbed 160.55 points, or 1.55%, to 10,502.99.

 

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