5:00AM New York, 7:00PM Tokyo - Tokyo rallies on U.S. led liquidity move and strong fourth quarter GDP growth.

Japan stock averages increased as the U.S. Federal Reserve in coordination with other G-10 central banks announced plans to inject liquidity in the credit markets. A government report on the fourth quarter economic growth also helped lift stocks.

Market Sentiment

In Tokyo trading Nikkei 225 gained 2.29% or 259.6 at 12,947.88, and the broader Topix Index rose 1.6% or 19.98 to 1,255.13.

In the first section of the Tokyo Stock Exchange 9.5 billion shares worth 1.1 trillion yen were traded and in the second section 675 million shares valued at 17 billion yen changed hands.

Of the Nikkei 225 stocks 187 gained, 31 declined, and 7 were unchanged. Nomura Holdings led advancers in the Nikkei 225 index shares with a rise of 6.72% after the U.S. Federal Reserve unveiled measures to ease credit conditions on the money markets.

U.S. Federal Reserve to add liquidity in the credit markets

U.S. Federal Reserve Bank announced yesterday that it will expand its securities lending program and introduce a new Term Securities Lending Facility (TSLF) to primary dealers in exchange of high grade mortgage debts from government agencies and no-agency rated private label residential mortgage debts.

The new facility- that will lend money for 28 days- will carry out weekly auctions and may inject up to $200 billion of Treasury securities.

The Federal Reserve authorities added that it will increase the currency swap arrangements with ECB by $10 billion to $30 billion and with the Swiss National Bank by $2 billion to $6 billion.

Fourth quarter GDP increases to 3.5%

Japan’s Cabinet Office reported in its second preliminary report on its web site today that Japan’s economy expanded by 3.5% in the fourth quarter, more than the 2.3% forecasted by economists.

Domestic demand was revised downwards to 0.4% from the previously reported 0.3%, while private consumption remained unchanged.

Also, private residential investment declined to 9.3% from the earlier estimate of 9.1% and fourth quarter net exports increased to 0.5% from 0.4% reported earlier.

Fourth quarter GDP in Japan rose at 3.5% and for the year 2007, Real GDP rose at 2.1%. GDP in 2006 rose at 2.4% and in 2005 at 1.9%.

Wholesale price jump 3.4% in February

The Bank of Japan reported in the monthly report on Corporate Goods Price Index published on its web site today that the domestic corporate goods price index increased to 3.4% in February from 3% in January, while the export price index fell 5.2% from a decline of 5.8% in January.

In addition, the import price index rose to 10.9% in February from 7% the previous month.

Japan corporate failures increase

Kyodo news reported today that private research company Tokyo Shoko Research said the number of corporate failures climbed 8.34% in February to 1,194 for the second straight month on a significant number of large bankruptcies.