Bank of Japan Buys Stocks to Lift Asset Prices

Chandrasekhar Atreya
16 Dec, 2010
New York City

Tokyo stocks stayed flat amid softer yen and debt worries from Europe. United States pledged to work closely with Japan and Europe for new sources of rare earth supplies. Bank of Japan started its new asset purchase program with 14 trillion yen exchange traded fund purchase.

[R]5:00 PM Tokyo, Japan – Tokyo stocks stayed flat amid softer yen and debt worries from Europe. United States pledged to work closely with Japan and Europe for new sources of rare earth supplies. Bank of Japan started its new asset purchase program with 14 trillion yen exchange traded fund purchase.[/R]

The benchmark index in Tokyo closed nearly unchanged and the U.S. dollar rose to near three-month high. Power utilities were in focus as Japan braces for cold snap and demand for heating and electricity surges.

The Nikkei 225 Stock Average added 0.01% or 1.51 points to close at 10,311.29 and the yen closed at 84.255 to a dollar in Tokyo today.

The United States pledged on Wednesday to work closely with Japan and European nations to deal with possible disruptions in the supply of rare earth minerals after China restricted exports with quota curbs.

Kobe Steel Ltd confirmed having reached a basic agreement with Essar Steel Ltd of India to jointly produce automotive steel sheets.

The two firms signed an agreement to invest a total of 30 to 40 billion yen to build a plant capable of producing 500,000 tons of automotive steel sheets in one of the existing steel plants of Essar in the state of Gujarat.

The Bank of Japan confirmed that it bought on Wednesday 14.2 trillion yen worth of exchange-traded funds under its new asset-purchase program for the first time.

The central bank had set up a 5 trillion yen fund in early October to purchase various financial assets and its first purchase to shrink risk premiums.

Toshiba Corp said today it plans to set up a liquid crystal display television plant in Egypt with local partner El Araby Group to increase in presence in the Middle East and Africa.

The joint venture, Toshiba Al Araby Visual Products Co, will be set up in Cairo next month with an initial cap of $10 million and the new plant is scheduled to commence production in March.

Itochu Corp said today it will spend A$140 million to develop the Ravensworth North coal mine in New South Wales. The company which has 10% stake in the mine plans to begin mining raw coal in July 2012.

The proposed cut in corporate tax was approved by the Cabinet today afternoon.

Stock Movers

A weakened yen led to a rise in export stocks.

Honda Motor added 1.29% to 3,215 yen and Suzuki Motor Corp rallied 1.21% to 2,055 yen. Canon Inc, the camera maker, rose 1.2% to 4,145 yen.

Sumitomo Mitsui Financial Group climbed 2.19% to 2,856 yen being the most actively traded on the Topix while Mitsubishi UFJ Financial Group Inc, Japan’s largest bank by market value, added 1.4% to 435 yen.

Aozora Bank Ltd surged 7.81% to 165 yen after Goldman Sachs Group Inc rated the lender as a ‘buy’ in its new rating coverage.

Dena Co, an operator of gaming sites, soared 9.9% after saying it will supply Samsung Electronics with its social gaming platform.