Nikkei in Japan Drop 3.1%

Mayank Mehta, Chandrasekhar Atreya and Darlington Musarurwa
25 May, 2010
New York City

Stocks fell in Japan as the yen rose against the euro and the dollar on growing signs of stress faced by European financial institutions. The Nikkei 225 Stock Average fell to its lowest close in almost six months.

[R]5:00 PM Tokyo, Japan – The benchmark index in Tokyo dropped sharply after the IMF warned of worsening financial condition in Spain. Rising tensions in the Korean peninsula also unnerved investors. Astellas Pharma expects sales to double in China by 2015. Sumitomo is to continue 10% production cut into 2011 as copper smelting fees are below cost.[/R]

Stocks fell in Japan as the yen rose against the euro and the dollar on growing signs of stress faced by European financial institutions. The Nikkei 225 Stock Average fell to its lowest close in almost six months.

The Nikkei index dropped 3.1% to 9459.89, the lowest since November 30. The Topix, which rose yesterday breaking a six-day losing streak fell 2.3% to 859.82 as six times more shares declined than those that advanced.

Spain’s banking industry continues to remain under pressure as consolidation has been too slow said IMF yesterday after a regular review of Spain.

Four Spanish savings banks plan to combine to form the fifth largest financial group in Spain as regulators push ailing lenders to merge with stronger partners.

Daiwa House Industry Co, Japan’s biggest home builder proposes to acquire more home builders to offset waning demand for new homes in Japan.

‘We will not acquire a company unless it is a win-win situation for us. As demand for new homes decline the need for as many companies in this sector as in some other sectors may not be necessary’, said Takeo Higuchi, Chairman of Osaka-based Daiwa House.

The company aims to more than double revenue to 100 billion yen by the year ending March 2014 from 46.9 billion yen in the year to March 2010, from its existing homes business, which includes renovations, the company said.

Sumitomo Metal Mining co, Japan’s second-largest copper smelter, plans to produce 404,000 tons of copper cathodes this fiscal, 10% lower below its installed capacity of 450,000 tons, because of lower processing costs and a well supplied domestic market.

‘Since current fees are below costs, we hope to maintain 10% production cuts in the year from April 1, 2011, because it is meaningless to increase output under these conditions’, said Mikinobu Ogata, Executive Officer in the non-ferrous division in an interview in Kyoto today.

Since sales in China are projected to double by year ending March 2015, we plan to hire at least 300 sales employees there, said Astellas Pharma Inc in documents today.

The company expects global revenue to reach 1.1 trillion yen over this period from 940 billion yen in the current year, helped by Chinese demand for the Tokyo-based company’s popular drug Prograf, used to prevent organ rejection in transplant patients.

The Nikkei 225 Index in Tokyo closed lower 298.51 or 3.06% to 9,459.89 and of the stocks in Nikkei 225 Stock Average, 14 increased, 206 declined and 5 was unchanged.

Nikkei Movers

Toray Industries Inc led the decliners in the Nikkei 225 Stock Average with a loss of 8.4% followed by Fuji Electric Holdings Co., Ltd 6.6%, Yokogawa Electric Corporation 6.4% and Sumitomo Heavy Industries Ltd 6.1%.

Dainippon Sumitomo Pharma Co., Ltd led gainers in the Nikkei 225 Stock Average with a rise of 5.1% followed by The Kansai Electric Power Company, Inc 1.8%, Chubu Electric Power Company, Inc 1.5% and Shionogi & Co., Ltd 1.3%.

Other Movers

Kawasaki Kisen Kaisha, Ltd, the shipping line, fell 4.3% to 328.00 yen tracking the losses in the freight rate index.

Nikon Corporation decreased 5.8% to 1,663.00 yen on the rising yen.

Nomura Holdings, Inc fell 1.6% to 548.00 yen.

Nissan Motor Co Ltd fell 4.7% to 647.00 yen as investors focused on rising worries in the euro-zone and strengthening yen.

Sumitomo Mitsui Financial Group, Inc, decreased 3.0% to 2,645.00 yen.

Tokio Marine Holdings, Inc, the insurer fell 1.4% to 2,459.00 yen.