The balance of shares sold short turned lower for the first time in three weeks last week, reflecting a growing wave of buying to cover short positions.

The outstanding balance of short sales stood at 1.29 trillion yen at the end of the week, down from 1.34 trillion yen in the previous week, which set a 13-year record high, according to industry figures.

Cued by the strong rebound in share prices in recent weeks, investors bought back borrowed shares to unwind their short positions ahead of the expiration of their six-month margin contracts, brokerage officials noted.

Tightened regulations on short selling and other government measures aimed at underpinning falling share prices have brought needed relief to the long-battered markets.

The global stock market rout in the wake of the Sept. 11 attacks in the United States enticed many investors, including hedge funds, to sell shares short.

Short selling then added to the selling pressure on a broad array of stocks, including blue-chip issues like Toyota Motor, Nissan Motor and Sony, as well as cyclical issues like Nippon Steel.

The balance of shares bought on credit, on the other hand, turned higher, ending a two-week fall.

The balance of long margin positions stood at 1.09 trillion yen, up 116.02 billion yen from a week before.

The long-short ratio rose to 0.85 from 0.73 a week before but still remained at a historically low level.

The high balance of short selling is now helping bolster the market.

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