[March 20, 2006]

LEAD: Nikkei ends above 16,600 for 1st time since early February+

(Japan Economic Newswire Via Thomson Dialog NewsEdge)TOKYO, March 20_(Kyodo) _ (EDS: ADDING INFO)

Japan's key Nikkei stock index rose sharply Monday to end above the 16,600 line for the first time since early February, led by strong gains in brokerage issues following news that Nikko Cordial plans to more than quadruple its dividend payout for the current business year from a year earlier.

The 225-issue Nikkei Stock Average rose 285.07 points, or 1.74 percent, to 16,624.80, its highest finish since Feb. 7. The Tokyo Stock Price Index of all First Section issues on the Tokyo Stock Exchange gained 24.24 points, or 1.46 percent, to 1,688.22.

The Tokyo market opened mixed, with the Nikkei falling slightly while the TOPIX edged up. But the Nikkei's early loss was soon erased and the index rose sharply reflecting active buying in the futures market while the TOPIX also steadily extended gains.

Shares rose almost across the board, with advancing issues outpacing retreating ones 1,421 to 218, while 55 shares ended the day unchanged.

Brokerage issues were higher after Nikko Cordial said Friday it would raise its dividend payout for fiscal 2005 ending March 31 to 50 yen per share from 12 yen a year earlier.

Midsize brokerage Marusan Securities announced last week it will nearly quadruple its dividend payout for the current fiscal year from 30 yen per share last year to 110 yen.

Such news fueled investors' interest in buying shares in companies that plan to pay high dividends or in those that are likely to raise dividend payouts ahead of the March 31 book-closing, brokers said.

"Investors' attention is now focused on shares with higher dividend prospects," said Katsuhiko Kodama, senior strategist at Toyo Securities Co.

Nikko Cordial climbed 90 yen, or 4.70 percent, to 2,005 yen, while Marusan Securities soared 300 yen, or 15.75 percent, to 2,205 yen.

Peers such as Nomura Holdings and Daiwa Securities Group also posted solid gains.

Other factors that supported the Tokyo market's strength included Friday's gains in the U.S. stock markets and foreign brokerages returning to be net buyers of Japanese stocks in orders placed before the market opened for the first time in three trading days, brokers said.

Kazuhiro Takahashi, head of the equity planning and administration department at Daiwa Securities SMBC Co., said that the Tokyo market was also supported by optimism that the supply and demand balance is likely to improve later as a series of investment trusts are scheduled to be established next week and will stimulate investment from trust operators.

Furthermore, the supply-demand balance is also anticipated to improve as the upcoming start of the new business year on April 1 is likely to make it easier for institutional players to take fresh positions, he added.

Leading Net services group Softbank was the most heavily traded issue by value. It climbed 50 yen, or 1.59 percent, to 3,190 yen, after saying Friday that it will acquire Vodafone Group Plc's entire 97.7 percent stake in its Japan unit, Vodafone K.K., for 1.75 trillion yen.

With the acquisition, Softbank will be Japan's third largest telecommunications company after the Nippon Telegraph and Telephone Corp. group and KDDI Corp. by taking over Vodafone K.K.'s 15 million subscribers.

Major advertising agency Dentsu lured buying after saying Saturday its upcoming joint venture with a Swiss sports event marketing firm has obtained the rights to sell the broadcasting rights in Asia for all soccer games to be organized by soccer's world governing body FIFA between 2007 and 2014. The stock soared 21,000 yen, or 5.22 percent, to 423,000 yen.

Mitsubishi Motors was the day's volume leader, up 8 yen to 240 yen.

Among other major gainers included shipping, land transportation, precision machinery and fishery-related issues.

Trading volume on the TSE's main section came to 1,655.56 million shares against Friday's 1,529.59 million shares.

The TSE's Second Section index rose 43.67 points, or 0.90 percent, to 4,922.40 on a volume of 74.68 million shares. In Osaka, the near-term June Nikkei 225 index futures contract was up 280 points to 16,520.

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