The Tokyo stock market could remain in a corrective phase for some time.

Having hit a year-to-date high of 14,529.41 on May 7, the benchmark 225-issue Nikkei average has languished below 13,000 in recent weeks.

With worries lingering over U.S. economic and corporate earnings prospects, New York share prices remain at a depressed level, keeping the Tokyo market from staging a rebound.

With uncertainty over how the administration of Prime Minister Junichiro Koizumi intends to deliver on his policy agenda, further volatility appears inevitable.

The Nikkei will probably stay in the 12,200-13,800 range in the coming weeks.

The market is focusing its attention on the economic restructuring program advocated by the Koizumi administration, the Bank of Japan’s monetary policy options and the yen-dollar rate direction.

The government has revised its index of coincident indicators downward to 10 percent for April, fueling fears of economic contraction.

The key gauge of the current state of the economy remained far below the boom-or-bust level of 50 percent for the fourth month in a row.

According to a Nihon Keizai Shimbun survey, listed companies are forecasting a 0.4 percent increase in pretax profits on average for the year to next March, down from a 38.5 percent gain the previous year.

The projected profit gain, which is based on the assumption that better days lie ahead in the second half of the year, could turn out to be wishful thinking.

The Koizumi administration unveiled its economic restructuring program last week, committing itself to painful reforms without sanctuaries.

Viewed from a longer perspective, the reform program will no doubt go a long way toward helping shore up the economy and, hence, the financial markets. But there is little dispute that the sweeping restructuring steps will have a negative impact on the economy in the near term.

Behind the recent falls in New York share prices were downward revisions of corporate earnings.

Still, a lack of further major earnings disappointments may soon help underpin the New York market.

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