Tokyo shares mixed in thin year-end trade

TOKYO - Tokyo shares ended mixed Thursday as the European single currency sat near 10-year lows and investors turned their attention to an upcoming Italian bond auction.

The blue-chip Nikkei index at the Tokyo Stock Exchange trimmed earlier losses and ended down 0.29 percent or 24.73 points at 8,398.89.

The Topix index of all first section shares spent most of the day in negative territory but emerged above water to end the day up 0.09 percent or 0.67 points to 722.12.

The market moved largely within a narrow band with many traders on holiday or staying away from making major moves ahead of Italy's closely-watched long-term bond auction later in the global day.

"If Italy's bond auction goes smoothly, the Nikkei will strengthen," Tachibana Securities Official Kenichi Hirano said.

Markets got little relief from Italy's successful auction Wednesday of 9.0 billion euros (S$15.1 billion) in six-month bonds at low rates, with euro worries instead dominating trade.

The average rate on the debt was 3.25 percent, half the 6.50 percent paid in a similar operation in November, when worries that Italian finances might collapse filled the markets.

But news that eurozone banks deposited a record amount of overnight funds at the European Central Bank on Tuesday - breaking a record set only the day before - showed there were still deep tensions in the single-currency zone.

Sentiment soured as yields on 10-year Italian bonds jumped to a painfully high 6.9 percent later on an uneasy day, raising worries about Rome's plans to sell longer-term bonds on Thursday.

"Investors are shifting to domestic demand-related stocks on defensive buying," Chibagin Asset Management fund manager Hiroaki Osakabe told Dow Jones Newswires.

He noted investor aversion to currency-sensitive stocks due to euro weakness.

In New York Wednesday, the single European currency fell to 100.73 yen, its lowest level since June 2001, while also plunging against the greenback below the $1.30 line to its lowest level since January 11.

The euro remained volatile against major currencies in Tokyo trade, falling as low as $1.2887 and 100.30 yen at one point.

In afternoon trade, the unit had recovered slightly against the dollar and was quoted at $1.2927 and 100.51 yen.

The dollar stood at 77.75 yen, slightly down from 77.90 in New York late Wednesday.

Among major shares, Toyota added 0.11 percent to 2,530 yen, Sony edged up 0.07 percent to 1,355 yen and Panasonic added 0.31 percent to 644 yen.

Nintendo lost 0.37 percent to 10,490 yen and supermarket chain Aeon lost 0.66 percent to 1,053.