Tokyo stocks have stayed firm since mid-January on successive establishment of investment trusts, which is expected to improve the supply-demand balance together with brokerages' stock purchases on their own accounts.

A mutual fund for domestic stock investment set up Feb. 2 collected some 800 billion yen from investors, reflecting the favorablesupply-demand balance at present.

Individuals, who had been net sellers through December, bought 490.9 billion yen more than they sold in January, posting the biggest buying excess in eight years and 11 months.

Although the market was earlier expected to be affected in February by corporations' sales to liquidate cross-shareholding ties, no noticeable sales have been seen apparently because mutual funds have absorbed them.

As the Nikkei's close above 20,000 Wednesday has confirmed the market's uptrend, companies will refrain from selling cross-shareholdings as long as stock prices rise.

External factors also have eased downside fears.

For example, the yen has weakened while the U.S. economy remains stable despite interest rate hikes.

The yen is expected to continue weak in light of concern about monetary authorities' market intervention and the dollar's strong showing against the euro.

Foreign investors, who spearheaded the rise of Japanese stocks last year, remained net buyers in January for the 16th month, though their buying excess was a moderate 104.7 billion yen.

Although economic activity and stocks in Japan are said to have greater room for improvement than those in the United States and Europe, foreign investors slowed their buying of Japanese stocks because Taichi Sakaiya, head of the Economic Planning Agency, recently indicated Japan had suffered an economic contraction in the October-December term from the previous quarter.

Nevertheless, the economy is expected to grow in theJanuary-March quarter in reaction to its October-December contraction.

Correction of domestic stock prices could be moderate because industrial production data, due to be released at the end of February, are expected to show favorable figures.

Although a Nikkei rise to 20,000 will probably stimulate profit-taking, stock prices are expected to rise steadily thanks to the favorablesupply-demand situation.