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Asian Markets Update: Japanese Stocks Rise as Traders Close Books on FY1999

As a new year dawns, retail and mutual fund activity in Japan begins to pick up.

TOKYO -- Japanese stocks rose Tuesday, and despite volatility due to a special auction of stock rights, the return to the market of retail investors and fund managers after a two-month absence promised smoother trading ahead.

Swinging back from negative territory, a rally in laggard blue-chips helped key Tokyo indices close higher. Volatility was still high in index heavyweights, though, following an auction to buy the rights of stocks that will split in the future.

The

Nikkei 225

rose 93.31 points to 20,374.34, while the

Topix

index, which includes all shares listed on the

Tokyo Stock Exchange's

first section, climbed 26.93, or 1.6%, to 1680.76. The

Jasdaq

small-cap index inched up 2.43, or 2.3%, to 105.86, while the Nikkei

over-the-counter

index rose 20.81, or 1.0%, to 2206.80.

Fund managers targeting blue-chips such as financial and large electronics firms provided a solid base for Tuesday trading, since any securities traded today will settle in fiscal year 2000, which starts on April 1. Many of the new mutual funds being set up -- about 15 are expected by the end of May -- are targeting low-priced blue-chips, not tech shares.

Key indices swung back and forth throughout the day, largely due to an auction by

Japan Securities Finance

, a financing company that provides loans to other securities firms for margin transactions. The JSF today auctioned the rights to buy stocks that will split in the future. Shares affected by short-term volatility from this auction included

Sony

(SNE) - Get Report

, down 80 yen to 13,120.

NTT DoCoMo

rose 220,000, or 5.5%, to 4.26 million. Despite technical difficulties with its I-mode Internet service on its mobile phones, investors cheered a local report that the company was getting ready to offer mobile phone Internet service in the U.S. by the end of the year.

Other Net, tech and telecom firms rose.

Nippon Telegraph and Telephone

(NTT)

climbed 70,000, or 4.6%, to 1.61 million,

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KDD

rose 570, or 6.9%, to 8850,

Softbank

rose 5000, or 6.1%, to 86,500, while

NEC

(NIPNY)

gained 145, or 5.3%, to 2875.

Hikari Tsushin

, which shed 5000, or 6.8%, to 68,800, said it bought a 20% stake in

Pixo

, a U.S. mobile device software developer. The two plan to set up a joint venture to develop mobile commerce software targeting Asian customers.

The greenback fell to 106.40 yen, as U.S. investors started to unwind long-dollar positions, currency dealers said.

Hong Kong's

Hang Seng

index managed to close up 8.83 at 18,301.69, despite selling from foreign investors in some tech shares ahead of the close of the first quarter.

Pacific Century CyberWorks

closed at its key psychological support of $HK20.00, down 0.45, or 2.2%, ahead of a

Cable & Wireless HKT

(HKT)

board meeting that is expected to give official approval for PCCW to take it over.

HSBC

(HBC)

shed 1.75, or 1.9%, to 92.75, while

Legend

(LGHLY)

lost 0.40, or 2.8%, to 13.90.