Share prices closed higher, with the benchmark index ending at its highest level in more than five years, as investors remain upbeat about solid corporate earnings and rosy economic data, dealers said. But dealers also said shares were top-heavy because many believe the market is overheated.
The Nikkei 225 Stock Average finished up 98.59 points or 0.6 pct at 16,649.82, after touching a high for the day of 16,718.79. It was the Nikkei's highest closing mark since Sept 4, 2000, when it settled at 16,688.21.
The broader TOPIX index of all first-section shares closed up 6.49 points or 0.4 pct at 1,710.77, off a high of 1,718.90. Gainers led losers 785 to 774, with 110 issues unchanged. Volume fell to 2.31 bln shares from 3.02 bln shares yesterday.
"There had been expectations of solid corporate earnings before the earnings results season began, and indeed, they are proving to have been right," said Ryuta Otsuka, a strategist at Toyo Securities. He said that the latest positive data on unemployment and household spending, both for December, also boosted market sentiment, as they provided evidence that the economy is recovering.
But Otsuka warned that the pitch of the rise in the market is becoming slower because the rebound has been too fast. Dealers said players were cautious before today's meeting of the US Federal Open Market Committee (FOMC), because many are awaiting the post-meeting statement to see if it gives any hints about when the Fed will end its series of increases in interest rates. Today's expected increase of 25 basis points in the Fed funds target rate has already been largely factored-in by the market, dealers said.