Tokyo shares close higher on Koizumi reform hopes/Wall St gains

TOKYO (AFX-ASIA) - Share prices closed higher following gains on Wall Street and on hopes new Prime Minister Junichiro Koizumi will deliver on his campaign promise of economic reforms, dealers said.	    They said the market focused on his cabinet appointments, seeking signs he will be able to gather a reform-minded team.	    Bank stocks rose after the UFJ group said yesterday it plans to bring forward the merger of group members Sanwa Bank and Tokai and will make additional gains through further restructuring.	    The Nikkei 225 index closed up 145.53 points at 13,973.03, off a high of 14,084.55 and a low of 13,957.63. Volume was 1.41 trln shares.	    The Topix index was up 17.89 points at 1,415.12, while the Nikkei 300 was up 3.86 points at 273.60.	    There were 1,013 rises and 358 decliners, with 95 stocks unchanged.	    The Nikkei June futures contract was up 90 points at 13,940 on the Osaka exchange and at 13,920 on the SGX.	    ABN Amro strategist Darrel Whitten said the market has been going "back and forth" on the issue of whether the positive long-term impact of Koizumi's reform policies will be offset by the negative implications for the economy near-term.	    In addition, investors remain uncertain over whether the new prime minister will be able to push through restructuring in the face of political opposition.	    "Once he gets to the nitty gritty (of implementing policy) he will run into resistance. People don't really believe he will be able to push through all his reforms," he said. 	    "He's already toned down his rhetoric. The jury is still out," Whitten said.	    However, he added that Koizumi's moves so far have been viewed positively.	    "The market is upbeat on reports that Yanagisawa gets to stay on at the FSA or even gets the Ministry of Finance," he said. "Anybody who comes in after Miyazawa is going to have some shoes to fill. That's a very important choice."	    Banks were higher after UFJ group's announcement yesterday, with UFJ Holdings up 57,000 yen, or 7.02 pct, at 869,000, Mizuho Holdings 54,000 higher at 731,000 and Sumitomo Mitsui Bank 40 higher at 1,142.	    Whitten said the reformist in Koizumi will also likely help the bank sector.	    "He said he supports this two-to-three year get-it-over-with plan," although Koizumi's earlier stated resistance to the stock-support plan could undermine hopes of a quick bad-debt resolution, given that the two are linked.	    Although an acceleration in bad debt write-offs will hit the banks' net profit, the market is looking beyond that to the hope that the sector will see renewed restructuring, Whitten said.	    "Any indication that that's speeding up is being taken as positive," he said, noting that the bank consolidation seen so far has failed firmly to tackle the need for rationalisation.	    Investors will react positively if a reformist cabinet is put in place and the banks are basically told that they are "not going to get the breaks" anymore, he added.	    The market is also focusing on the upcoming earnings season, particularly in the hope of signs of the outlook for the current fiscal year. 	    "The business sentiment index has crashed in the last month or two. Expectations have come down but not to the extent that they may have to," Whitten said.	    Advantest, which reported results after the close, was flat at 15,010, after earlier gains. 	    NEC, also due to post earnings after the close, was 80 higher at 2,245 on positive reaction to a report the company plans to stop producing DRAM chips overseas. 	    Among others firms reporting earnings today, JVC was up 3 at 803, Matsushita Communications 80 higher at 7,560, Fujitsu up 9 at 1,793 and Sharp up 39 at 1,665.	    Aiwa was down 200 at 1,075 after results that showed its net loss widened to 39.0 bln yen from ll.5 bln and confirming it will issue 66.1 mln new shares, raising 35 bln yen, to boost capital.	    Toyota rose 140 to 4,100 after the company said yesterday that it will raise its stake in its Hino Motors unit to 50.1 pct from 36.6 by purchasing new shares at 542 yen each for a total investment of 66 bln yen.	    Hino fell 8 to 587. 

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