Japanese stocks rebound after trading suspension

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The Independent Online

Japan's main stock index bounced back with vigour today as investors snapped up technology and internet-related stocks that had been beaten down the market's big sell-off the previous two days.

The benchmark Nikkei 225 index gained 355.10 points, or 2.31 per cent, to 15,696.28 points. That was its largest single-session point gain since June 2002.

The index had dropped nearly 6 per cent on Tuesday and yesterday amid investor jitters about an expanding probe into possible fraud at internet start-up company Livedoor.

The afternoon session started 30 minutes later than normal as a precaution to avoid a repeat of yesterday, when a flood of sell orders prompted the Tokyo Stock Exchange to close trading 20 minutes early - the first time Asia's biggest bourse has shut down trading for capacity reasons.

Livedoor, founded in 1997, offers various internet services, including consulting and electronics sales, but has also grown by buying up other companies. Its brash 33-year-old chief executive, Takafumi Horie, has denied any wrongdoing.

Welcoming today's rebound, Japan's economy and banking minister Kaoru Yosano said, "I'm very confident that after an adjustment period the stock market will recover, reflecting Japan's economic fundamentals."

The exchange said executed orders came to around its capacity limit of 4 million at the close. When transactions neared that ceiling on Wednesday, it was forced to shut down trading 20 minutes earlier than normal - a huge embarrassment.

The exchange said it is currently working to boost its computerised trading system capacity to as many as 5 million by the end of January and up to 8 million in the longer term.

Trading volume, a different measure, is usually a far higher number - often in the billions - because each transaction typically involves many shares.

Tokyo Stock Exchange President Taizo Nishimuro blamed the exchange's troubles on the Livedoor probe, adding that the exchange was in the middle of updating its computer systems, and asked that investors try to bundle orders as much as possible.