The balance of short margin positions rose for the second consecutive week last week.
The balance of shares sold short stood at 925.98 billion yen at the end of the week, up 19.25 billion yen from a week earlier, according to an industry report.
Short sellers opted for banking issues, counting on hard times facing banking institutions that are saddled with the heavy burden of bad loans and are awaiting opportunities to unwind cross-shareholdings.
The balance of Mizuho Holdings shares sold short stood at 25,907 shares, up 28 percent over a week earlier.
The figure was the highest since Mizuho -- the financial group formed by Dai-Ichi Kangyo Bank, Fuji Bank and Industrial Bank of Japan -- was listed on the Tokyo Stock Exchange in September.
Short selling also showed marked increases for Mitsubishi Tokyo Financial Group, up 32 percent; UFJ Holdings, up 31 percent; and Daiwa Bank, up 19 percent.
The balance of long margin positions, on the other hand, fell for the seventh straight week.
The balance of shares bought on credit stood at 1.58 trillion yen, down 66.84 billion yen.
In volume, the balance of long margin positions stood at 2.61 billion shares, down 56.9 million shares. The long-short ratios fell to 1.70 from 1.81 a week earlier in value and to 2.49 from 2.64 in volume.
With investor confidence at the lowest level in months, the benchmark 225-issue Nikkei average hit a postbubble closing low of 11,579.27 at the start of the week.
This was the lowest since Jan. 7, 1985.
Buyers moved in later in the week as a broad array of shares fell to attractive price levels.