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Although the Tokyo stock market is still in a bit of a corrective phase, a light is beginning to flicker at the end of the tunnel.

After forging ahead strongly late last month, Tokyo share prices have given up much of their recent gains.

The correction has followed a steep rebound triggered by upward revisions of corporate earnings projections and the firm trend on Wall Street.

Having climbed past the 17,000 level in late August for the first time in more than a month, the benchmark 225-issue Nikkei average is now hovering around 16,000.

Share sales related to book-closings for the April-September first half of fiscal 2000, such as those to liquidate cross-shareholding ties, have also caused the correction.

But investors do not need to become overly pessimistic.

The upward revisions of corporate earnings projections are very likely to continue before the release of interim earnings reports.

Although the anticipated move has already been factored into stock prices to some extent, it will no doubt help prop up the market.

There are many attractive stocks among electronics, communications and high-technology issues as they have been sold down from their levels in March.

The supply and demand balance in the Tokyo stock market is faced with uncertain factors such as the replacement of some component stocks of the Nikkei average.

Nevertheless, the balance appears to have pulled out of its worst situation, as share sales by financial institutions have apparently run their course.

Trading is expected to remain dull for the time being as participants continue paying attention to corporate earnings reports for the fiscal first half as well as to the instability of the New York market caused by higher crude oil prices and the euro’s weakness.

Because favorable corporate earnings are seen only in specific sectors, buying will be limited to them before the spread of strong performance to consumption-related and other sectors is confirmed.

However, fundamentals are steadily improving.

The Nikkei average therefore is expected to rise, though gradually, and top 18,000 by the end of this year.

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