Investors were still skeptical about the merger and many of them were anticipating more details from a news conference by Sumitomo Trust late on Friday and reports over the weekend, brokers said. Depending on the progress on the merger talks between the two banks, "there is the possibility that bank issues may fall sharply again early next week," the Naruse Securitiesbroker said. The key Nikkei stock average of 225 selected issues on the Tokyo Stock Exchange rose 77.82 points to end at 15,210.04.

The broader Topix index of all first-section issues gained 5.29 points to 1,190.82 points, with an estimated 410 million shares changing hands against 422.7 million shares the previous day. Brokers also attributed the gains to the yen's earlier fall against the dollar in foreign exchange trading and subsequent bargain-hunting in export-related issues. "Although the yen continued to fall to the 143 yen level, the reaction to this was strong enough to move the market overall, with modest buying seen among selected international blue chips," an Issei Securities broker said. The yen recouped earlier declines following the merger reports, trading at 141.90-92 around 4 P.M. (0700 GMT).

Trading in LTCB and Sumitomo Trust shares were suspended in mid-afternoon pending clarification of the merger news. LTCB surged 15 yen to 73, a gain of 25.9 per cent. On the other hand, SumitomoTrust dropped 20 yen, or 3.0 per cent, to 648 after trading around 665 before the news . Other banks benefitted from the reports, with Bank of Tokyo-Mitsubishi up 60 at 1,390, Sumitomo Bank up 121 yen, or 10 per cent, at 1,336 and Sanwa Bank ahead 69 yen, or 6.1 per cent, at 1,199.