Nikkei Drops; Toyota Confirms Fault

Chandrasekhar Atreya
15 Jul, 2010
New York City

Stocks in Japan fell on retail sales decline in the U.S. Bank of Japan Lowers Forecast for 2012. Nissan halts production for three days in two plants in the U.S. Nippon Telegraph and Telephone Corp plans to buy South Africa

[R]5:00 PM Tokyo, Japan – Stocks in Japan fell on retail sales decline in the U.S. Bank of Japan Lowers Forecast for 2012. Nissan halts production for three days in two plants in the U.S. Nippon Telegraph and Telephone Corp plans to buy South Africa’s Dimension Data.[/R]

Japanese stocks declined, dragging the Topix to the most in five weeks on the weakness in the U.S. retail sales. The Federal Open Market Committee also cuts its growth outlook in the U.S in the wake of the sovereign debt crisis in Europe and mixed data back home.

The Nikkei 225 Stock Average fell 1.12% or 109.71 to close at 9,685.53 in Tokyo today. The broader Topix Index sank 1.6% to close at 856.6 for its biggest decline since June 7. Both indexes had closed yesterday at their highest levels since June 24.

The Bank of Japan expects the growth in the world’s second-largest economy to slow down next year as the effects of fiscal stimulus evaporates worldwide and overseas demand comes down to normal levels.

Policy makers of Japan, while raising their forecast for the year ending March 2011 to 2.6% from 1.8% estimated in April, have now cut their forecast for next year to 1.9% from 2.0%, the Bank of Japan said in a statement today in Tokyo. The board held the benchmark overnight interest rates unchanged at 0.1%.

Toyota Motor Corporation conceded on Wednesday that its investigations of about 2,000 recalled vehicles found evidence that sticking accelerator pedals and interference by floor mats did indeed cause some of the accidents.

It is the first time since the recalls that Toyota has acknowledged that its internal review, which is still continuing, found sudden-acceleration complaints to be valid. The National Highway Traffic Administration of U.S after receiving about 3,000 complaints about sudden acceleration is conducting its own investigation also.

After announcing that production will be halted for three days in Japan, Nissan Motor Co, today confirmed production at two of its plants in the U.S. will remain closed for three days, because of a delay in getting parts from Hitachi Ltd.

The plants in Smyrna, Tennessee, and Canton, Mississippi, will be closed on July15, 16 and July 19, Nissan spokesman Toshitake Inoshita said by phone from Yokohama. Parts deliveries will resume from Hitachi next week, said the spokesman.

Texas Instruments Inc, the second-largest U.S. chipmaker, has bought two plants in Japan to produce enough semiconductors to boost it annual sales by around $1 billion.

“We’ve got a wonderful opportunity to get equipment at very cost-effective prices. We have a very clear objective of trying to grow market share and grow faster than the market,” said Gregg Lowe, Senior Vice President in charge of the company’s analog business.

The company will keep the smaller of the two facilities running after moving some of the manufacturing equipment to the U.S. The second facility will be idle for the time being, said Dallas-based Texas Instruments in a statement.

Yamaha Motor Co, the world’s second-largest motorcycle maker, said sales in Europe and North America may fall as much as 20%, after a spreading debt crisis in Europe crimps demand.

“From May of this year, there has been a sudden impact from the Greek crisis and sales in North America and Europe may decline as much as 20%, compared with an earlier estimate for a drop of about 10%,” said CEO Hiroyuki Yanagi in an interview in Tokyo yesterday.

Renesas Electronic Corp plans to quadruple its sales of chips that connect wireless devices to telephone networks and the internet by the year 2015.

“The $200 million purchase of Nokia’s wireless modem business announced July 6, will help the company’s wireless division to boost its sales fourfold to $4.5 billion by 2015,” said Senior Vice President Hideaki Chaki in an interview on July 13 in Tokyo. He also said that the acquisition will pay for itself by the year 2013.

Nippon Telegraph and Telephone Corp said Thursday it will buy the South African IT firm Dimension Data for $3.24 billion in a bid to expand its overseas markets including fast growing Africa.

NTT plans to launch a tender offer for all outstanding shares in Dimension Data and will successful will finance the acquisition through a combination of its own cash and debt.