[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Thursday, 29 December 2005, 07:00 GMT
Nikkei looks towards 20-year best
Japanese businessman in front of stocks terminal
Separate data shows the economy picking up strength
Japan's Nikkei share index has topped the 16,400 mark for the first time in five years, as overseas demand for domestic shares continues to grow.

The index is now in line to record its best yearly gain since the mid-1980s, offering further proof that the economy seems to have turned the corner.

The Nikkei climbed 1.1% on Thursday, giving a rise of 42.5% so far this year, its best performance since 1986.

It comes as manufacturing expanded at its fastest pace in two years.

The NTC Research/Nomura/JMMA Purchasing Managers Index, which gives a snapshot of manufacturing activity, reached its best levels since December 2003.

Increased production

The Nikkei closed up 149.59 points, or 0.92%, to 16,344.20, after earlier hitting 16,445.56, its highest level since September 2000.

Japan's economy has rebounded as an increase in capital investment and consumer spending, on the likes of cars and electronics, has made up for a slowdown in exports.

However exports may now be getting stronger too, thanks to increased demand from China.

Further data showed industrial output rose 1.4% in November, as plants and factories boosted production for a fourth consecutive month, reaching historically high levels.

Better bonuses

"We can say the economy has finally emerged from a soft patch," said Akiyoshi Takumori, chief economist at Sumitomo Mitsui Asset Management.

As well as overseas investors, home-based individual investors are becoming more active, boosted by seasonal bonuses, which are a major component in annual salaries.

"Everyone's bonuses were a little bit better this year, and they've seen the value of their assets increase, so if you go to an electronics store now there are a lot more people," said Hiroyuki Nakai, chief strategist at Tokai Tokyo Securities.

The Paris-based Organization for Economic Cooperation and Development expects Japan's economy to grow 2.4% this year and 2% in 2006, up from previous forecasts for 1.5% growth in 2005 and 1.7% next year.

Better times for Japanese economy
29 Nov 05 |  Business
Japanese deflation appears to end
25 Nov 05 |  Business
Japan's foreign investments grow
14 Nov 05 |  Business
Domestic sales aid Japan's growth
11 Nov 05 |  Business
Upbeat Japan sees economy pick up
30 Sep 05 |  Business
Japan's businesses more confident
16 Sep 05 |  Business

The BBC is not responsible for the content of external internet sites


Americas Africa Europe Middle East South Asia Asia Pacific