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Japanese Economy Ends Year With Signs of Improvement

Japan's stock market ends the year on a high note, while industrial production appears to be improving, and the country's unemployment rate drops to a six-year low. And two struggling companies are to receive government-backed bailouts.

Japan's benchmark stock index, the Nikkei, closed the 2004 trading year at its highest point since mid-July. And for the second year in a row, both the Nikkei and the broad-based TOPIX index rose.

Analysts say this is a good sign that prices will continue to climb in 2005.

Japan's economy is showing signs of recovery, but the pace is much slower than the growth that was recorded earlier in 2004.

Government agencies say the unemployment rate dropped to its lowest in six years in November. At 4.5 percent, unemployment was down a fifth of a percent from October. Industrial production rose a seasonally-adjusted 1.5 percent in November compared with October.

Japan's Industrial Revitalization Corporation, which helps struggling businesses, is to give cash injections to two companies.

The government-backed agency will aid builder Misawa Homes and retailer Daiei. The Daiei bailout package will total about $7 billion in writedowns, loan waivers, and injections of funds.

A former president of the company, Kunio Takagi, says he will resign as chairman to take responsibility for the company's financial mess.

Mr. Takagi says the retailer will halt plans to open new supermarkets, and will also close unprofitable stores and sell its restaurant-related operations.

A Japanese retailer has opened its first franchised outlet in Shanghai, after the Chinese government lifted a ban on foreign franchise chain stores operating in the country.

Family Mart, which already owns more than 40 directly operated convenience stores in the city, says it plans to convert most of these to franchises and wants to have about 350 outlets in Shanghai by 2007.

Another Japanese convenience store operator, Lawson, which already has 210 company-operated outlets in Shanghai, says it plans to open 100 or so franchises during 2005.