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Tokyo stocks closed higher Tuesday, and the Nikkei passed the 10,000 threshold for the first time since last August, but profit-taking erased much of the gains and it ended below 9,900.

The 225-issue Nikkei stock average rose 103.56 points, or 1.06 percent, to close at 9,898.72, its highest finish since Aug. 27, which was also the last time it passed 10,000 on an intraday basis.

Before losing steam Tuesday, it reached 10,027.60.

The broader Topix index of all first-section issues on the Tokyo Stock Exchange gained 9.26 points, or 0.96 percent, to 976.30, its highest finish this year.

Following a 2.59 percent advance Monday, the Nikkei chased higher ground from the beginning of trading as investors continued to snap up technology issues due to solid gains in U.S. equities overnight and improved corporate sentiment, brokers said.

The Nikkei was pushed back below 9,900 in the late afternoon as investors took profits in a wide range of issues.

“Technology, media and telecommunications issues drew heavy buying following gains in such shares in the United States,” said Hiroshi Sato, equity general manager at Cosmo Securities Co.

In the afternoon, the government said core private-sector machinery orders rose a seasonally adjusted 6.5 percent in May from April, which was better than market participants had expected, but advances from the positive news were offset by the late profit-taking, brokers said.

Investors are waiting for the release of second-quarter earnings reports in the U.S., with Yahoo Inc. announcing its April-June earnings Wednesday, said Hiroichi Nishi, equities general manager at Nikko Cordial Securities Inc.

Trading was heavy, with volume on the TSE’s main section increasing to 1.757 billion shares from Monday’s 1.535 billion. It was above 1 billion shares for the 29th straight session, the longest streak ever.

Due to heavy trading, the TSE had brief system failures in the morning and afternoon sessions, causing delays in distributing information to news media and brokerage houses for two to three minutes at a time, the TSE said, adding trading was not affected much. The bourse had similar problems last Thursday.

Despite the Nikkei’s rise, declining issues outpaced gainers 815 to 622, with 89 issues closing unchanged.

Prime Minister Junichiro Koizumi and his Cabinet capitalized on the key Tokyo stock index’s brief move above 10,000 Tuesday, portraying it as a sign of economic vigor.

“The Japanese economy has potential,” Koizumi said after the Nikkei average topped the psychological threshold for the first time since Aug. 27, 2002, on an intraday basis. “I’ll advance reforms to make that power visible and improve the real economy.”

Said Chief Cabinet Secretary Yasuo Fukuda, “Japanese stocks had been undervalued. The surpassing of the 10,000 line means the market is welcoming economic fundamentals. It will have a major impact on the economy and the society.”

Finance Minister Masajuro Shiokawa attributed the rise to improvement in corporate earnings.

“A major reason behind it is the release of good corporate earnings results,” he said at a separate news conference. “I think companies will compete with each other to release good earnings reports in the future, and this will lead to the vitality of the Japanese economy.”

But Shiokawa added that authorities must be careful about speculative movements in the stock market.

“We must stay on guard,” he said. “I believe we must take corrective measures when necessary.”