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The Tokyo stock market appears to be gathering steam for bursts of high-priced activity in the months ahead.

After giving up 23 percent since hitting the April 12 peak of 20,833.21, the 225-issue Nikkei average rebounded strongly Monday, topping the 17,000 level for the first time in more than two weeks.

The trigger for the recent decline was the April 14 tumble in New York share prices. Selloffs triggered by the reshuffle of the Nikkei components ensued, adding to the downward pressure.

Wall Street’s demoralized performance reflected concern over inflation and higher U.S. interest rates. The U.S. Federal Reserve raised its target for the federal funds rate by 50 basis points to 6.5 percent last month in an effort to slow economic growth and keep inflation in check.

The question now is whether the Fed’s policy-setting Open Market Committee will raise key interest rates again at its meeting set for June 27.

Additional rate hikes could trigger a deep slide on Wall Street and any upheaval there is bound to cause a severe backwash around the globe. Attention is also focusing on foreign investors, major net sellers in the Japanese markets in recent months.

Foreign investors’ net sales of Japanese stocks for all of May are seen to have topped 900 billion yen, compared with net sales of 840 billion yen the previous month.

Given favorable corporate earnings and economic prospects in Japan, they may soon turn net buyers of Japanese stocks.

Japanese institutional investors are meanwhile stepping up purchases, opting for shares supported by favorable earnings prospects and those long neglected during the market’s recent rallies.

The balance of shares bought on credit on the Tokyo, Osaka and Nagoya bourses has dropped some 40 percent from the March peak near 5 trillion yen, indicating the liquidation of long margin positions is about to run its course.

Individual investors may soon return to the market in search of potential gains. The Nikkei may hover in a near-term range between 16,300 and 17,800. The Dow appears likely to move between 10,300 and 11,200 for the time being.