Japan's Nikkei average booked a 19 percent gain in 2009, with shares of high-tech exporters leading a rebound rally on a weaker yen and as economic stimulus measures helped turn around the world economy.
The benchmark's yearly climb followed a 42 percent plunge — the biggest loss in its 58-year history — last year when investors saw the global financial crisis take a heavy toll on risky assets including stocks.
On the Tokyo stock market's final trading day of the year on Wednesday, the Nikkei ended down 0.9 percent, dragged lower by bankruptcy worries about Japan Airlines (JAL).
Transport Minister Seiji Maehara said cabinet ministers would meet at 6 p.m. (0900 GMT) on Wednesday to discuss JAL.
"Weakening in the yen, a gradual recovery in the economy and growing demand for companies helped buoy the market in time for the year-end," said Naoki Koga, a senior fund manager at Toyota Asset Management.
"But domestic-demand sectors, on the other hand, fell out of favour this year due to uncertainty about the government's policy. Financial stocks, in particular, were hurt by worries about capital raisings."
In moderate trade, the benchmark Nikkei closed at 10,546.44 after earlier rising to 10,707.51, its highest since Aug. 31. It has clawed back about 50 percent since hitting a 26-year closing low in March.
The broader Topix slipped 0.9 percent to 907.59.
Some 1.7 billion shares changed hands on the Tokyo exchange's first section, in line with last week's daily average.
Declining stocks outnumbered advancing ones by nearly 4 to 1.
In one encouraging technical sign for the Nikkei, its 25-day moving average edged above its 75-day moving average, a phenomenon known as the "Golden Cross" that can often indicate further rises and is regarded as a buying signal.
"We're likely to see the market off to a strong start in the new year. But the focus in the first half will be on corporate earnings for the next business year, with government policies holding the key for their direction," Koga said.
Japanese financial markets will be closed on Thursday and Friday for the New Year's holiday.
JAL'S WOES
JAL lost 23.9 percent to 67 yen. Sources have told Reuters that a state-backed turnaround fund now weighing whether to bail out the company is considering using a bankruptcy procedure similar to Chapter 11 in the United States as part of its revival plan.
The Nikkei business daily reported that the fund plans to guarantee the struggling carrier's fuel payments and other commercial transactions if it is restructured in bankruptcy court.
"There's still a lot of uncertainty about what's going to happen to JAL, and this is inviting selling," said Tomomi Yamashita, a fund manager at Shinkin Asset Management.
Japan's top banks, JAL's main creditors, fell amid growing investor worries about the carrier's future.
Mitsubishi UFJ Financial Group fell 0.4 percent to 452 yen and Mizuho Financial Group slipped 0.6 percent to 166 yen. Sumitomo Mitsui Financial Group retreated 0.4 percent to 2,645 yen.
Bankruptcy proceedings usually lead to a sharp cut in the payment of sales receivable and other creditor claims.
The dollar's surge against the yen to a two-month high earlier helped shares of exporters as investors welcomed a weaker yen, which boosts exporters' profits when repatriated, but many lost steam in afternoon trade.
Honda Motor Co dropped 1 percent to 3,110 yen after ekeing out some gains at one stage.
The greenback was steady above 92 yen, led by buying on last-minute commercial needs before the end of the year.
But Hitachi Ltd advanced 3.7 percent to 284 yen after Japan's biggest electronics firm by sales said it is considering selling some of its operations as it tries to return to profit.
HIGH-TECHS SHINE IN 2009, BANKS LAG BEHIND
High-tech exporters led gains in the Japanese market in 2009, while banking shares lagged behind, hurt by worries about equity financing as well as the growing fear that JAL might go bankrupt.
The Tokyo stock market's electrical machinery index has gained about 35 percent this year, outperforming a gain of around 6 percent in the Topix index and a more than 20 percent slide in the banking index.
Market analysts say the big banks have been hit by a combination of concern about JAL and worry that Mizuho and SMFG might be forced into equity fundraisings early next year.
Japan's top bank Mitsubishi UFJ has already raised about 1 trillion yen through a new share issue.
Investors will keep a close eye on currency moves in the new year as these will impact earnings prospects for exporters, analysts said.
