Japanese large and mid-cap stocks gained ground on Tuesday thanks to some strong figures on the domestic economic front.

The Nikkei 225 advanced 0.7 per cent to end the trading day at 15,877.67 while the Topix was up 0.5 per cent at 1,532.39.

Figures showing that core private-sector machinery orders unexpectedly jumped 17 per cent in July from the previous month helped calm nerves jangled by Monday’s news of the fastest fall in Japan’s economic output in four years.

The stockmarket also benefited from a rebound in property companies, after sharp declines for more than a week on fears Japan’s property boom may be over. Sentiment towards real estate stocks improved thanks to news that office rental rates in central Tokyo rose in August for the 25th consecutive month. The real estate sector gained 3.5 per cent. Mitsubishi Estate, one of Japan’s biggest property companies, leapt 4.3 per cent to Y2,810, although its share price was still much lower than a week ago.

The Tokyo Stock Exchange’s real estate investment trust index declined 0.4 per cent to 1,792.32 despite a rise in the shares of conventional property companies. The index has plummeted 32 per cent from a peak hit in May.

Export-focused stocks were relatively weak although the yen was mildly weaker against the dollar compared with 24 hours earlier. By late afternoon in Tokyo trading the yen was at Y113.7 to the dollar, still much stronger than Friday’s Y115. Investors fear another sudden rise in the yen, making Japanese exporters less competitive. The autos sector edged down 0.2 per cent. Toyota Motor, Japan’s biggest carmaker, lost 0.2 per cent to Y6,430.

The TSE’s Mothers market of smaller growth stocks slumped another 2.9 per cent to 656.29, extending its strong downward trend as investors continued to flee from riskier assets. The index is worth less than a quarter of its January 2006 high.

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