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Last Updated: Thursday, 30 March 2006, 10:31 GMT 11:31 UK
Nikkei index hits five-year high
Japan's Nikkei share index closed above 17,000 on Thursday, its highest level for more than five and a half years.

The rise came amid increasing demand for blue chip and technology stocks, and followed a rebound on Wall Street.

The Nikkei ended the day up 106.93 points at 17,045.34, its highest closing level since 29 August 2000.

The increase in the Nikkei came despite a higher-than-expected fall in industrial production for February, which declined by 1.7%.

"Production seems to have gone into an adjustment after the very strong October-December quarter," said Yasuo Yamamoto, senior economist at the Mizuo Research Institute.

"But the figures were not much of a surprise because there tend to be blips in January and February, due to fewer working days" Mr Yamamoto added.

Structural reforms

Japanese government officials said the Nikkei's rise past the 17,000 level showed that reforms introduced to revive the economy and defeat deflation were working.

"It means the structural reforms that have been carried out are highly regarded from inside and outside Japan," said Chief Cabinet Secretary Shinzo Abe.

"There is an expectation that further reforms will be carried out and that Japan's strength will increase further," Mr Abe said.

Yoshihisa Okamato at Fuji Investment said the Nikkei index could reach 18,500 in the coming fiscal year, which starts in April.

Banking boost

Shares in technology and high value companies have been pushing the Nikkei up, and the index has risen by 3.4% over the past five trading days.

On Thursday, bank shares led the climbers after Goldman Sachs increased its profit estimates for both 2005-2006 and 2006-2007 for key banks.

Mitsubishi UFK Financial Group saw its shares rise by 4.09% and Mitsui Sumitomo Insurance was up 2.12%.

The index was also buoyed by the news that struggling US car company General Motors was planning to sell its stake in Isuzu. Shares in the Japanese car manufacturer subsequently climbed 2.4% to 436 yen.

Other car companies also rose, including Nissan, up 0.7%, and Toyota, up 1.3%.

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