TOKYO -- Major blue-chips closed out the week lower than when they went in, but Japanese traders hardly minded what would otherwise have been an unsettling drop among market leaders.

This week's story was less one of fundamentals, and more of fallout from the reshuffling of the key

Nikkei 225

index. That was the major reason for the big selloff today, and since the revamped index will debut Monday, traders predicted the market will push higher from here. And even though worries about the performance of U.S. shares loom, another rally in Internet shares here also pushed those concerns to the background for now.

The Nikkei 225 index fell 706.64 points, or 3.7%, to 18,252.68, while the


index, which includes all shares listed on the

Tokyo Stock Exchange's

first section, rose 5.12 to 1634.12. The


small-cap index jumped 4.79, or 5.8%, to 87.68, while the Nikkei


index climbed 77.91, or 4.0%, to 1874.45.

Many fund managers were reportedly done selling the outgoing 30 shares from the Nikkei 225 index by midweek, but many continued to dump some high-priced blue-chips in order to raise a more cash. Some of the newcomers to the index can be 60 times higher in price than the stocks they are replacing, traders said.

On the Net front,

Yahoo! Japan's

stellar earnings released late Tuesday have not only helped its parent,


, but have helped to boost the entire sector. After weeks of bleeding red,

Trend Micro

climbed 1500, or 12.0%, to 14,000,

Oracle Japan

rose 4800, or 7.4%, to 70,000 and Yahoo! Japan jumped 5 million, or 13.5%, to 41.95 million, while Softbank climbed 3000, or 6.1%, to 52,300.

Offers for

Hikari Tsushin

grossly outnumbered bids, so the trading suspension continued for the battered phone reseller and Net incubator. Many investors are on the lookout for Hikari's earnings release on Monday. Although the firm has already said it expects to post approximately 15.4 billion yen in losses for the first half, fund managers are keen to know Hikari's business plan for the next year before plotting their next moves.

Bank shares were slightly lower despite an announcement by

Sakura Bank



Sumitomo Bank


that their planned merger schedule will be pushed forward by a year. Sakura rose 32, or 4.4%, to 762, but Sumitomo fell 178, or 11.4%, to 1380. The

Industrial Bank of Japan


shed 18, or 1.8%, to 990, while

Dai-Ichi Kangyo Bank

lost 30, or 3.1%, to 955.

Local papers have recently highlighted the difficulties Japan's big merging banks were having in consolidating staff, branches and other business operations. Many reports suggest that top banking officials have argued for months over even the names of new entities, let alone new business plans.

With major markets on holiday, the greenback barely budged and stood around 105.73 against the yen.



index inched 5.91 higher to 767.16.

Samsung Electronics

, a favorite among foreign fund managers, climbed 1500 won to 302,500, while

SK Telecom

(SKM) - Get Report

was hit with a trading suspension after the firm's 10-for-1 stock split. Shares will resume trading Monday.



index rose 11.43 to 9120.48.

Taiwan Semiconductor Manufacturing

(TSM) - Get Report

closed flat at NT$186.00.

Hong Kong and Singapore were closed for a national holiday.