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http://biz.yahoo.com/rb/001125/j.html

Saturday November 25, 9:17 pm Eastern Time

[b]Credit Risks Pressure Tokyo Stocks[/b]

By Kiyoshi Takenaka

TOKYO (Reuters) - [b]Tokyo stocks are likely to remain under pressure this week on fears of more bankruptcies in Japan and uncertainty over the future of Prime Minister Yoshiro Mori, although the Nasdaq's Friday rebound may provide support.[/b]

Market players want to see a quick end to the political uncertainty that has unsettled both U.S. and Japanese markets in recent sessions, analysts said.

``It's up to new developments on the political front this week, and it's going to be a waiting game,'' said Hitoshi Ichio, strategist at Commerz Securities.

Ichio said the long-awaited conclusion of the U.S. presidential election may not be particularly bullish for U.S. stock markets, but will surely mean one less bearish factor for Wall Street and consequently for Tokyo.

U.S. market stability is widely seen as a crucial prerequisite for a turnaround in Tokyo shares, which have fallen steadily in recent sessions.

The outlook on the domestic political front is no less shaky. with Prime Minister Mori's days in office seen as numbered since his public approval rating has slumped well below 20 percent.

Traders expect the Tokyo's benchmark Nikkei average to move in a range between 14,100 and 15,100 this week.

The Nikkei eked out a 0.10 percent gain to 14,315.35 last Friday in a market where gains in choice technology shares and losses in major banks canceled each other out.

It fell 1.57 percent in the week, and has shed a quarter of its value since the start of the year.

Later on Friday in U.S. trade, the Nasdaq composite index jumped 5.41 percent to 2,904.38, while the Dow Jones industrial average was up 0.68 percent at 10,470.23.

[b]Traders said Tokyo will be propped up by the Nasdaq gains, at least temporarily, as long as Bush maintains his lead against Democrat Al Gore.[/b]

Bush is generally viewed as more pro-business than Gore.

``Just so long as Bush keeps his lead, he probably does not need help from the U.S. Supreme Court, and we will be one step closer to the conclusion,'' said Tatsuo Kurokawa, deputy general manager at Nomura Securities.

``Markets just loathe uncertainty, above everything else.''

CONCERNS OVER CREDIT RISKS LOOM

[b]Besides political uncertainty, renewed concerns about mounting bad loans held by ailing traditional manufacturers are expected to cast a damper on major Japanese banks, which would then throw a pall over the broader market.[/b]

[b]General contractor Mitsui Construction Co Ltd said last week it may seek debt forgiveness from banks. That has contributed to a 12.3 percent loss for Sakura Bank Ltd, one of Mitsui's main creditors, in a four-day losing spell.[/b]

``Apparently bank shares are in the process of factoring in potential bankruptcies to come and debt forgiveness requests,'' said Masami Nagano, senior fund manager at Sanyo Investment Trust Management.

Mitsui's announcement followed that of ailing plant engineering firm Chiyoda Corp, which said it was seeking 26.2 billion yen in debt forgiveness from its lenders, including Bank of Tokyo-Mitsubishi Ltd (BTM).

BTM lost 2.44 percent to 1,200 on Friday, while Sumitomo Bank Ltd, which is set to merge with Sakura next April, fell 5.47 percent to 1,158 yen.

That weak trend may continue to weigh on the entire market this week as few believe they have seen the last of debt forgiveness pleas from the ``Old Japan'' companies.

``No one can say for sure we won't see any more debt forgiveness requests from the likes of general contractors,'' said Hidenori Karaki, equities general manager at Tokyo Mitsubishi Personal Securities.

WEEK'S TOP PICKS

As investors remain reluctant to place big bets on technology shares, such as Sony Corp and Fujitsu Ltd given volatility on the Nasdaq, laggards among Old Japan manufacturers could lure investors, traders said.

Shipbuilder Hitachi Zosen Corp shot up 20 percent in the last two sessions after news of brisk demand for very large crude carriers prompted investors to buy its shares.

Other traditional manufacturers such as steelmakers may also continue attracting investors seeking short-term profits, said Masayoshi Okamoto, a trader at Jujiya Securities.

Last Friday, Sumitomo Metal Industries Ltd gained 8.33 percent to 65 yen and Kawasaki Steel Corp rose 6.67 percent to 112 yen.

-- Deb Mc. (vmcclell@columbus.rr.com), November 26, 2000