The Tokyo stock market has turned bullish and an unexpectedly strong rally has kicked off.

The benchmark 225-issue Nikkei average climbed beyond 11,000 early last week, a level that had been regarded as the current upside of the market.

With the uptrend in share prices gathering momentum, the Nikkei average is now hovering around 12,000, a level unseen since early August.

Rising stock prices are a buying incentive because investors may see some relief from the market's monthly exposure to crises.

Although the current rally is directly attributable to the Financial Services Agency's toughened control on short sales, other contributing factors also deserve attention.

These include the selective stance taken by major banks on construction companies and other financially troubled corporate clients, the firmness of stocks and economic activity in the U.S. and a halt in the deterioration of Japan's macroeconomic factors, such as the ratio of inventory holdings to industrial production, which is closely linked to stock trading.

Although Japan's gross domestic product in the final quarter of last year contracted 1.2 percent, the stock market is expected to brush it aside as having no major impact on current trading.

Past experience suggests that a rally fueled by coverage of short positions will continue into the coming month or two.

In addition, low-risk stocks with low price-to-book-value ratios -- the issues that have taken a battering repeatedly -- and low-priced stocks and issues supported by favorable earnings prospects are now expected to lead the rally and help the Nikkei test 13,000.

But it should be noted that rising stock prices may generate uncertain factors.

For example, banks may procrastinate on the disposal of bad loans. And the yen's depreciation, caused by Japan's aggravated economic fundamentals, appears to be ending now that the dollar has fallen back to the 120 yen level.

The rising trend may experience moderate adjustments after the April 1 start of fiscal 2002 as stock-buying moves, including investments by pension funds, run their course.

The adjustment is expected around the Golden Week holiday season in early May.