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TOKYO -- After months of jitters over the public battle between Japan's central bank and the government, Tokyo's reaction to the first

rate hike in 10 years was downright boring.

Japanese shares drifted a few notches higher Monday, a quiet response to the

Bank of Japan's

Friday 25 basis-point interest rate increase. The market lacked direction while trading volume dwindled as investors rushed off to their vacations.

The

Nikkei 225

index rose 36.41 to close at 16,153.91, while the

Topix

index, which includes all shares listed on the

Tokyo Stock Exchange's

first section, climbed 2.54 for a finish at 1493.43. The

Jasdaq

small-cap index gained 0.86, or 1.1%, to 82.02, while the Nikkei

over-the-counter

market closed up 18.93, or 1.1%, at 1684.63.

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With short-term interest rates still very low, around 0.28%, an immediate reaction to the change is not expected. In the long-term, however, investors expect more corporate failures and therefore another round of systemic fears in the financial community. Interest-rate sensitive bank shares were mixed, with the

Industrial Bank of Japan

rising 1 yen to 732 ($6.73) and

Tokai Bank

slipping 5, or 1.0%, to 510.

Foreign investors were net buyers of equities today, especially in the tech sector. But the buying was immediately met with heavy selling by local brokerage dealers who shed shares to book profits before their fiscal first half ends in September.

TDK

(TDK)

rose 90 to 14,740,

Sony

(SNE) - Get Sony Corp. Report

fell 10 to 10,190, while

NTT DoCoMo

lost 20,000 to 2.78 million.

Also amid directionless trading, Hong Kong's

Hang Seng

index dropped 216.36 to close at 16,998.06. Some concerns over

Pacific Century Cyberworks

hit shares, which fell HK$0.70, or 4.4%, to 15.30 ($1.96). Sentiment has turned sour since investors got hold of news that chairman

Richard Li

sold about 240 million shares last Wednesday. This is on top of recent volatility as

Cable & Wireless HKT

investors struggle to chose between the cash or stock option this week before the two firms officially merge.

Hutchison Whampoa

fell 1.50, or 1.3%, to 113.00 amid news that the firm would buy a 51% stake in

Andala

, a consortium of firms set to bid for Italy's third-generation mobile phone license.

Korea's

Kospi

index jumped 11.04, or 1.5%, to end the trading session at 733.25 after investors cheered the weekend restructuring announcement by the

Hyundai Group

. The firm said it would sell around $1.3 billion worth of assets and spin off

Hyundai Motor

and

Hyundai Heavy Industries

to raise much-needed cash. Although the reforms do not solve all problems, it is an important step because the conglomerate accounts for nearly 15% of the nation's gross domestic product.