Prospects for Japanese share prices over the coming week are likely to hinge on whether the US Congress approves a 700-billion-dollar Wall Street bailout package, analysts said on Friday. "It is still uncertain if the US package can win approval as US politics is entering election mode," said Kazuhiro Takahashi of SMBC Daiwa Securities.
"Even if they can reach an accord, it could only be a formality and we still can't predict if the package can be carried out in a practical manner." Talks over the rescue proposal were gridlocked as the Tokyo market closed Friday, with lawmakers at loggerheads over the way forward.
Under a US Treasury proposal, the government would buy 700 billion dollars of toxic mortgage-related assets at the heart of the global credit crisis. But initial market optimism about the move gave way to concerns about how effective the final package will be. Daisuke Uno, chief market strategist at Sumitomo Mitsui Banking Corp, said he was not expecting a positive impact from the bailout plan next week.
"Since it has not been approved as it is, Congress will need more time before settling on the bill," Uno said. "The market will have to digest unfavourable factors next week, dragging down share prices." Over the week to September 16, Tokyo's headline Nikkei-225 index slipped 27.7 points or 0.23 percent to end Friday at 11,893.16.
The broader Topix index of all first-section shares edged down 1.23 points or 0.11 percent to 1,147.89.
The Japanese financial sector got some support as Japanese financial giants moved to buy up big stakes in troubled Wall Street rivals.
Japan's top broker Nomura Holdings is snapping up Lehman Brothers' operations in Europe, Asia-Pacific and the Middle East, while Mitsubishi UFJ Financial is buying 20 percent of ailing US banking giant Morgan Stanley.
Nomura shares surged 12 percent over the past week and Mitsubishi UFJ jumped eight percent. "But it is too early to say if they are actually good bargains," Takahashi said. "It will take some time to evaluate the deals."
On Tuesday, Japan will release data on unemployment, industrial output, household spending and housing starts for August, while the central bank's key "Tankan" survey of business sentiment is due on Wednesday.
Analysts said the reports were likely to highlight the weakening health of Asia's largest economy, which is skirting recession. Overseas, the European Central Bank is to meet on interest rates on Thursday while Washington will report key monthly jobs data on Friday.
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