Nikkei Gains; Toyota Recall Expands

Mayank Mehta, Chandrasekhar Atreya and Sanjay Barot
05 Jul, 2010
New York City

Stocks in Japan traded higher after loan restrictions were eased in an Osaka Prefecture. Toyota starts recalling certain luxury car models in Japan to fix engine problem. Daiwa Securities agreed to buy the convertible bond and Asia derivative business from KBC Grope NV.

[R]5:00 PM Tokyo, Japan – Stocks in Japan traded higher after loan restrictions were eased in an Osaka Prefecture. Toyota starts recalling certain luxury car models in Japan to fix engine problem. Daiwa Securities agreed to buy the convertible bond and Asia derivative business from KBC Grope NV.[/R]

Stocks in Japan climbed after a report in Mainichi newspaper indicated that Osaka Prefecture may loosen loan restrictions. The yen declined against the euro and lifted exporters.

The Nikkei 225 Stock Average rose 0.69% or 63.07 to close at 9,266.78 and of the stocks in the index, 168 increased, 44 declined and 13 remained unchanged. The broader Topix Index also advanced 0.7% to close at 836.89.

The Ministry of Finance will auction tomorrow 2.2 trillion yen of 10-year bonds followed by a sale of 600 billion yen of 30-year debt on July 8.

Toyota Motor Corp started recalling about 92,000 luxury Lexus and Crown vehicles on Monday in Japan over defective engine components, in the latest setback for the automaker already beset with quality issues.

Toyota spokesman Paul Nolasco said recalls in overseas markets will commence soon, totaling about 270,000 vehicles globally. That includes 138,000 vehicles in the U.S., 15,000 in Europe, 10,000 in the Middle East, 6,000 in China, 4,000 in Canada, and 8,000 in other regions of the world.

“We apologize for inconveniencing our customers and we hope to fix the problem soon,” said Nolasco.

Daiwa Securities, Japan’s second-largest brokerage firm agreed to buy the convertible bond unit and equity derivatives business in Asia of KBC Groep NV for about $1 billion.

Daiwa will pay about $200 million for the assets and the balance for the trading position, according to the agreement, the companies said in their joint statement. The transaction is subject to regulatory approvals and is expected to be completed in the fourth quarter according to the joint statement.

Nikkei Movers

Credit Saison Co. Ltd led gainers in the Nikkei 225 Stock Average with a rise of 8.9% followed by Marui Group Co Ltd 5.7%, Shinsei Bank, Limited 5.4% and Teijin Ltd.4.7% and Mitsui Engineering & Shipbuilding Co 4.5%.

Mizuho Financial Group, Inc led the decliners in the Nikkei 225 Stock Average with a loss of 3.4% followed by Obayashi Corp 2.0%, Fast Retailing Co Ltd 1.7%, GS Yuasa Corporation 1.5% and Yamato Holdings Co Ltd 1.4%.

Other Movers

Acom Co Ltd surged 26.2% to 1,444.00 yen after the consumer-finance company said the Mainichi newspaper reported that the Osaka government will seek to start a business zone with looser lending rules than national laws.

Canon Inc rose 0.7% to 3,285.00 yen and Elpida Memory, Inc rose 3.1% to 1,331.00 yen after the yen weakened against the euro.

Fast Retailing Co Ltd fell 1.7% to 13,190.00 yen after the domestic sales at its Uniqlo stores fell 5.8% last month.

Mitsubishi UFJ Financial Group, Inc fell 0.2% to 4.56 yen.

Sharp Corporation rose 3.0% to 946.00 yen.

Sony Corporation rose 0.8% to 2,330.00 yen after the electronics maker was upgraded to “outperform” in new research coverage at Credit Suisse Group AG.