5:00AM New York, 7:00PM Tokyo - Japan’s average monthly wages per regular employee declined 1.9% in December from a year earlier.

Stocks in Japan rallied on strong corporate earnings especially from carmakers and a weakening yen, including news that the U.S. Federal Reserve slashed its key rate by 0.5% yesterday to 3.5%.

In Tokyo trading Nikkei 225 climbed from a 1.4% drop in the morning trading to close up 1.85% or 247.44 to 13,592.47, and the broader Topix Index also rose from a 1.8% decline to a gain of 26.20 to 1,346.31.

In the first section of the Tokyo Stock Exchange 10 billion shares worth 1.2 trillion yen were traded and in the second section 729 million shares valued at 5.2 million yen changed hands.

Of the Nikkei 225 stocks 177 gained, 44 declined, and 4 were unchanged. Yahoo Japan Corporation led advancers with a rise of 11.68% after reporting a 13% increase in profit in the third quarter yesterday.

Japan’s Ministry of Health, Labor and Welfare reported in its provisional report of monthly labor survey that average cash earnings per regular employee declined 1.9% in December from a year ago to 596,895 yen, while contractual cash earnings rose 0.3% to 271,495 yen.

Also scheduled cash earnings jumped 0.5% to 250,995 yen. However the real wage index fell 2.7%.

The labor ministry further added that total hours worked per regular employee fell 1.5% from a year ago to 150.6 hours in December and non-scheduled hours worked in manufacturing gained 0.5% to 17.3 hours.

The statistics also show that number of regular employees was increased by 1.7% in December year-on-year, while full-time and part time employees rose 1.7% and 1.9% respectively.

Nikkei news online reported today that Japan’s five biggest banks-Mitsubishi UFJ, Mizuho Financial Group, Sumitomo Mitsui Financial Group, Sumitomo Trust & Banking-may face combined subprime losses of 500 billion yen.

Already Sumitomo Trust yesterday revealed subprime losses amounting to 29.9 billion yen and Sumitomo Mitsui also booked 99 billion yen in losses over 9 months.

According to the online news service, Mitsubishi UFJ Financial Group may report 50 billion yen in losses in the nine months to December 2007 and that the losses might be increased to 90 billion yen for the full year ending in March 2008.

In addition, analysts have now projected sub-prime losses at Mizuho Financial Group may reach 300 billion yen.

The yen weakened from 106.58 to 106.60 against the dollar.

Of the Nikkei 225 index shares Yahoo Japan Corporation led advancers with a rise of 11.68% followed by gains of 11.13% in Terumo Corporation, of 8.70% in Matsushita Electrical Industries, of 8.22% in Alps Electrical Company Limited, and of 7.58% in Sanyo Electric.

Yahoo Japan Corporation rose after reporting yesterday that the company’s third quarter profits jumped 13%.

Terumo Corporation also advanced on strong earnings results.

Carmakers were also buoyed by strong sales in Asia and Europe that helped offset shrinking demand in Japan and in the U.S. Honda Corporation reported yesterday that net profit in the third quarter jumped 35% to 347billion yen from 276billion yen a year earlier.

According to Honda, strong demand from Brazil, Russia, India and China is expected to drive sales in 2008.

Hino Motors rose 6.21% and Toyota Motor Corporation soared 5.43% as a result.