Asian Markets Update: Bank of Japan Continues Zero Interest Rate

But in a postclose announcement, the BOJ warned the time to discontinue the policy is approaching.

Author:: Kaya Laterman
Publish date:: Jul 17, 2000 6:39 AM EDT

TOKYO -- With Japanese investors convinced that the

Bank of Japan

would not raise interest rates, a rally in large-cap technology shares helped the market inch higher Monday.

Those investors were right. After the market closed, the BOJ said it would keep its current zero interest rate policy intact. The

Nikkei 225

index closed up 143.93 to 17,286.83, while the

Topix

index, which includes all shares listed on the

Tokyo Stock Exchange's

first section, fell 3.82 to 1576.04. The

Jasdaq

small-cap index finished after shedding 0.92, or 1.1%, to 85.12, while the Nikkei

over-the-counter

index lost 13.39 to 1760.06.

It is largely believed that the central bank's decision came after the nation endured the second largest corporate bankruptcy to date. The

failure of

Sogo

, one of Japan's largest department store operators, shocked investors because the government had previously said it would bail out the 170-year old firm by using public funds.

In an unusual move, the BOJ issued a statement after the meeting was over. Board members said the deflationary pressures stemming from weak demand had greatly waned, and that the time was "approaching" for the zero-interest rate policy to end.

But even before investors got a chance to see the BOJ's decision, a rally in tech shares helped Tokyo start the week off on a solid footing.

Fujitsu

climbed 60 yen to 3420 ($31.61) and

Advantest

rose 110 to 22,510 while

Softbank

rose 150, or 1.2%, to 12,950.

Food and beverage makers continued to slide amid even more news about tainted products.

Kirin Beverage

lost 200, or 7.1%, to 2635 after the firm recalled its popular Kirin Speed sports drink when customers complained about an odd taste.

Yamazaki Baking

shed 29, or 3.0%, to 943 after customers griped about moldy bread.