Shares in the troubled construction firm jumped 12.24 per cent to close at 55 yen on Tuesday, bringing its gains in two days to more than 29 per cent on reports its creditor banks were near agreement on a restructuring plan.

The news has helped to diminish concerns that Hazama could go under because of its debts to Shinsei Bank, which last month refused to forgive huge loans to Sogo Co Ltd, forcing the large department store chain to file for bankruptcy. The news that Shinsei, bought this year by the US investment group Ripplewood Holdings, might forgive some of its loans was unexpected after it threw Japan's old-fashioned banking system into confusion in July by refusing to forgive Sogo's loans. Shinsei would forgive around 12 billion yen ($110 million) of the 43 billion yen loan, the Nihon Keizai Shimbun newspaper said. In addition to forgiving the 55 billion yen and 35bn yen lent to Hazama, Dai-Ichi Kangyo Bank and Mitsubishi Trust & Banking Corp will jointly purchase the rest of the debt held by Shinsei Bank.

"It doesn't matter whether Shinsei forgives part of its loans to Hazama and then hands over the rest to DKB and Mitsubishi Trust or whether it hands over the lot because the cost will be the same," said Setsuko Akiba at Deutsche Securities. Shinsei declined to comment on Hazama."We make decisions on a case-by-case basis. We decided not to forgive loans to Sogo because the money that needed to be put aside would have been too large for us. .if we had accepted a loan waiver request," a spokesman said.

--(Reuters)