"Foreign investors are buying back high-tech issues which were totally knocked down yesterday," said Kazue Mayuzumi, senior market analyst at Nikko Securities. On Thursday, the Nikkei closed below 17,000 points for the first time since September 27, when it finished at 16,821.06.

"Buying was also boosted by gains on the US Nasdaq yesterday as the Nikkei index has become more susceptible to moves in New York," Mayuzumi said.

Winners included high-tech issues such as Sony Corp. which gained 250 yen to 11,690 yen and Toshiba Corp., up 43 yen, or 4.2 per cent, to 1,060 yen. Computer giant NEC Corp., which announced it returned to the black in the year to March shortly before the market closed, was up 60 yen at 2,740 yen.

Turnover on the major board totalled 729 million shares against Thursday's 587.1 million. High-tech and electronics issues now account for more than 40 percent of the headline index after the Nihon Keizai Shimbun Inc. (Nikkei) newspaper group replaced 30 of the 225 companies on April 24.

The index's first reshuffle in nearly nine years was designed to reflect the emergence of the information-technology sector, prompting investors to offload "old economy" companies including metals and textiles. "The reshuffle has made the index vulnerable to the Nasdaq and if the Nasdaq tumbles so does the index," said Masaaki Higashida, senior market analyst at Nomura Securities.

Share prices on South Korea fell 2.5 per cent on Friday in thin trade amid concerns about ailing investment trust firms, dealers said. "The market is experiencing a shortage of money due to the capital injections for restructuring of the financial sector, compounded by lingering uncertainties about the sector itself," a Hanvit Securities analyst said. The Seoul government announced Friday it would inject 4.9 trillion won in public funds into Korea Investment Trust Co Ltd and Daehan Investment Trust Co Ltd between June and September.