Tokyo market closes at high for the year

Banks and tech stocks took Tokyo to its highest close of the year Tuesday

HONG KONG, China -- Tokyo's Nikkei average ended sharply stronger on Tuesday to reach its highest level this year.

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It closed at 14,425.46, a gain of 491.14 points or 3.5 percent.

Investors were encouraged by a recovery in the U.S. Nasdaq and hopes that Japan's new Prime Minister Junichiro Koizumi will lift the economy and make progress on structural reform.

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Most other Asian stock markets were closed Tuesday for the Labor Day/May Day holiday.

Tokyo's capital-weighted TOPIX index rose 45.23 points to 1,411.69.

Analysts said the market is maintaining last week's momentum, based on strong hopes that the Koizumi administration will be able to revitalize the moribund Japanese economy.

Old economy issues

The promise of reform at the weekend Group of Seven meeting in Washington also fuelled hopes, prompting investors to keep picking up "old economy" issues, including builders and banks, analysts said.

In other encouraging news Tuesday, Economics Minister Heizo Takenaka said he would visit the United States on Thursday to meet goverment officials, including White House economic adviser Lawrence Lindsey.

Takenaka said while the U.S. economy's fundamentals were sound, there were important issues such as import demand that were key to the recovery of Japan's own fragile economy.

Banks, led by UFJ Holdings, closed broadly higher Tuesday, bolstered by media reports that Koizumi's key policy speech to be delivered on Monday would include vows to solve the bad loan problem in the next two to three years.

Nasdaq gains

Technology stocks also posted healthy gains due to Nasdaq's overnight rally. Sony Corp jumped 3 percent to 9,520 yen, and chipmaker Hitachi Ltd. soared more than 10 percent to 1,338 due to stronger-than-expected earnings results for the year.

Qantas was the star performer on the Australian stock market after unveiling a deal with rival Impulse

Japan's largest mobile phone company, NTT DoCoMo gained 3 percent or 90,000 yen to 2.63 million yen.

In Australia, one of the few other stock markets open on Tuesday, the benchmark S&P/ASX200 index ended slightly weaker, down 0.7 points at 3328.7.

Most investors stayed on the sidelines, pending the outcome of the Reserve Bank of Australia's monthly board meeting. If the bank decides to cut rates, it will announce its decision Wednesday morning.

Bluechips BHP, News Corp and Woolworths were all higher. But the star performer was Australia's largest airline, Qantas Airways, which soared 71 cents or 26 percent to $3.40 after announcing that it was taking over the main trunk routes of discount rival Impulse Airlines.

Anti-globalization activists who gathered outside the Australian Stock Exchange building in Sydney and other state capitals on Tuesday clashed with police. Several police and protestors were injured and a number arrested.

Reuters contributed to this report.

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