Weekly Gain of 4% in Nikkei

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

Stocks in Japan gained on improving business climate in China and reduction in jobless claims in the U.S. Sumitomo plans to buy bank assets in the U.S. Inpex is planning a stock offering to finance its gas project in Australia. Fast Retailing reduces guidance.

[R]5:00 PM Tokyo, Japan – Stocks in Japan gained on improving business climate in China and reduction in jobless claims in the U.S. Sumitomo plans to buy bank assets in the U.S. Inpex is planning a stock offering to finance its gas project in Australia. Fast Retailing reduces guidance.[/R]

Stocks in Japan rose for a second day after China reported it business climate improved in the second quarter and after the U.S. said fewer people filed for jobless claims boosting climate for exports.

The Nikkei 225 Stock Average gained 0.52% or 49.58 to close at 9,585.32 and of the stocks in the index, 111 increased, 92 declined and 22 remained unchanged. The broader Topix remained little changed at 861.21. Nikkei gained 4.1% for the week, the most since the week ended Dec 4 and the Topix gained 3.6%, the most since January 8.

Sumitomo Mitsui Financial Group Inc, Japan’s second-largest bank by market value, plans to spend about $5 billion buying assets in a suitable U.S. commercial lender in the next three years, according to a top executive of the company.

“Since we cannot achieve our goal of getting 30% banking profit within three years organically, we can’t overlook the U.S. market in terms of stable returns and size. We’ll likely target banks in the U.S. Midwest or East Coast,” said Hiroshi Minoura, head of international banking at Sumitomo in a July 7 interview.

Denso Corp, Toyota Motor Corp’s largest parts component supplier in China, plans to expand production capacity over the next 12 months as rising demand outweighs concerns about rising labor costs.

“Denso, the world’s biggest listed auto parts maker, will add capacity in China mostly to make air-conditioners for cars,” said Denso CEO Nobuaki Katoh in an interview on July 7 at Kariya in Japan.

Some workers of Honda Motor Co’s assembly plant in Guangzhou, China, walked out on July 7 and July 8, causing disruption in the plant for the fourth time or more since May of this year.

Some of the workers at Honda’s joint venture plant in the city had staged the walk out stating that they were dissatisfied with the working conditions, said Yoshiyuki Kuroda, a company spokesman from Tokyo today. They later returned to work after reaching an agreement with the management, he said.

Inpex Corp, Japan’s largest energy explorer, said the company is planning to issue 1.22 million shares of common stock in Japan and abroad to fund the Ichthys natural-gas project in Australia, the company said in its filing to the Ministry of Finance yesterday.

Inpex needs to strengthen its financial resources to boost investment in overseas projects like Ichthys project, the Abadi LNG development in Indonesia, and the Kashagan oil field in Kazakhstan, said Kazuhiko Itano, a company spokesman by phone from Tokyo yesterday.

Itochu Corp, a Japanese trading house, has agreed to buy 10.3% stake in the uranium explorer, Extract Resources Ltd of Australia to benefit from the global demand for uranium. The acquisition needs the approval of Australia’s Foreign Investment Review Board. The stake if approved will make Itochu, the third largest shareholder of Extract Resources, the Japanese trader said in a statement today.

The 10% stake will be worth about 15 billion yen, the Nikkei English News reported earlier today.

Nikkei Movers

JGC Corp led gainers in the Nikkei 225 Stock Average with a rise of 4.7% followed by IHI Corporation 4.7%, Mitsumi Electric Co Ltd 3.5% and Chiyoda Corp 3.5% and Softbank Corp 3.5%.

Inpex Holdings Inc led the decliners in the Nikkei 225 Stock Average with a loss of 13.0% followed by Sanyo Electric Co., Ltd 3.3%, Shinsei Bank, Limited 2.7%, Mizuho Trust & Banking Co., Ltd 2.6% and The Sumitomo Trust and Banking Company, Limited 2.4%.

Other Movers

Canon Inc added 1.3% to 3,490.00 yen after the Nikkei English News reported the camera maker’s group operating profit in the first half may have almost tripled.

Fast Retailing Co Ltd rose 0.6% to 12,800.00 yen after the company saw double-digit growth in the first nine months of the year, but uneven sales of spring items forced the company to cut full-year forecasts.

Inpex Holdings Inc plunged 12.6% to 415,500.00 yen after the company said it’s planning the country’s biggest share sale by a non- financial institution this year to fund a natural-gas project in Australia.