Increased exports to other Asian countries and strong earnings from overseas investments lifted the nation's current account surplus to a record high in 2004 for the second straight year, according to Finance Ministry data released on Monday.

The 18.59 trillion yen surplus rose 17.9 percent from a year earlier, the ministry said in a preliminary report on the balance of international payments.

The current account covers trade in goods, services and income, such as interest and dividend payments from investment in overseas assets.

The income account posted a record surplus of 9.27 trillion yen, up 12 percent year on year.

Of the total, earnings from securities investments accounted for 7.43 trillion yen due to growth in interest and dividends on overseas securities, particularly U.S. government bonds.

Analysts say the surplus indicates Japan is reaping growing returns on its huge foreign assets, which have built up as a result of past current account surpluses having been reinvested in overseas markets.

The surplus in merchandise trade totaled 14.31 trillion yen, up 16.7 percent year on year.

Merchandise exports came to 58.31 trillion yen due to brisk exports to Asia of such items as chipmaking equipment and steel products. Imports stood at 44 trillion yen.

The balance of services trade incurred a deficit of 4.15 trillion yen, 6.4 percent higher than a year earlier.

The deficit was mainly due to a 26.6-percent growth in the number of overseas tourists from the previous year as the domestic economy recovered and the influence of the SARS epidemic disappeared.

According to a separate Finance Ministry report released the same day, net buying of Japanese stocks and bonds by foreign investors was 14.99 trillion yen in 2004, sharply exceeding the previous high of 9.84 trillion yen recorded in 2000. Net buying of foreign securities by Japanese investors totaled 18.78 trillion yen, second highest on record.(IHT/Asahi: February 15,2005)