JAPANESE stocks, heavily beaten down by the Livedoor market manipulation scandal, soared spectacularly yesterday as investors judged that the previous days’ punishment had been overdone.

But even as optimism returned to the trading floors, the future looked gloomy for Livedoor’s 33-year-old founder, Takafumi Horie.

Investigators spent yesterday sifting through thousands of Livedoor e-mails in search of evidence linking Mr Horie to suspected securities law violations.

Worse still, the apparent suicide of a former business ally left Mr Horie visibly stunned, able only to tell a press conference: “I don’t want anyone else to die.” The 38-year-old victim had been a key figure in Livedoor’s development as a listed company.

In their eagerness to buy back the IT sector shares that they had savaged the session before, investors shrugged off rising fears about the stability of the Tokyo Stock Exchange, which had to extend yesterday’s lunch break by 30 minutes to reduce strain on the decrepit order-handling system.

Having been forced on Wednesday to shut down 20 minutes early for lack of system capacity, the world’s second-largest bourse remains under huge political pressure to bring itself up to acceptable international standards.

The buying interest covered many sectors, particularly blue-chip industrials. But as shares started their 355-point rally, police in the southern island of Okinawa discovered Hideaki Noguchi lying next to a bloodied knife in a suspected suicide. He later died in hospital.

Mr Noguchi was the vice-president of HS Securities, a brokerage house whose M&A consultants had advised Mr Horie on the original flotation of Livedoor. The same company is understood to have advised on other Livedoor deals that are under investigation by Tokyo district prosecutors.

HS Securities’ offices in Tokyo were among the many premises raided by investigators earlier in the week. Mr Noguchi had spent a period in the early 2000s on the board of Livedoor Finance. Although HS Securities was raided as part of the fraud inquiry, the prosecutors’ office said that it had not investigated or summoned Mr Noguchi.

Livedoor said yesterday that it had found no wrongdoing during an internal investigation of its market conduct. The company denies allegations that it misled the market.

It was an HS Securities subsidiary, Japan M&A Management, that came up with the calculations for the controversial stock-swap deals that are now under heavy scrutiny by regulators.

Prosecutors were poised last night to question senior executives of Livedoor, including Mr Horie, over the exact procedures by which Livedoor undertook at least three of its 19 deals during the past three years.

The investigation into Mr Horie’s affairs received a boost yesterday when a former Livedoor executive handed over e-mails sent between him and other senior company figures.

• The Nikkei 225 average rose 2.2% to close at 15,696 yesterday
• Technology stocks were some of the biggest risers
• Softbank was the Nikkei’s second-biggest riser at 14.97% and Yahoo Japan surged 13.51%

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