Nikkei Gains 1.5%; Japan Left Rates at Historic Low

Chandrasekhar Atreya
21 Dec, 2010
New York City

Tokyo stocks snapped its three-day decline with a rise of 1.5% after Bank of Japan kept key interest rate and asset purchase plan unchanged. The U.S. government imposed a fine $32 million on Toyota Motor. Japan and South Korea sign a nuclear deal.

[R]5:00 PM Tokyo, Japan – Tokyo stocks snapped its three-day decline with a rise of 1.5% after Bank of Japan kept key interest rate and asset purchase plan unchanged. The U.S. government imposed a fine $32 million on Toyota Motor. Japan and South Korea sign a nuclear deal.[/R]

Tokyo stocks climbed for the first time in three days after tensions between Koreas receded and the strength in the U.S. retail sales lifted the outlook for exporters. Several independent analysts revised holiday sales increase to at least 4% compared to a year ago.

The Nikkei 225 Stock Average climbed 1.5% or 154.12 points to 10,370.53. The broader Topix added 0.9% to 906.21.

The yen closed today at 83.72 to a dollar and 110.45 to a euro in Tokyo.

The Bank of Japan kept the key interest rate unchanged along with the size of its assets purchase program after its meeting today.

The board led by Governor Masaaki Shirakawa in a unanimous decision, not only left the size of its asset buying fund at 5 trillion yen but also kept the benchmark rate between zero and 0.1%, according to the statement of the central bank released today.

U.S. imposed civil penalties for Toyota Motor Corp to $32.425 million related to the safety recalls made last winter by the automaker.

The company, which paid earlier this year a record $16 million to resolve a related government investigation, agreed to pay the newly slapped fines.

The rental market in Tokyo seems to be falling further, with rents falling for the 27th month in a row in Tokyo.

The average asking rent in the five central districts of Tokyo fell 1.1% from November to 20,189 yen per 3.3 square meters, according to Building Kikaku Co. The survey covered the wards of Chiyoda, Chuo, Minato, Shinjuku and Shibuya.

Japan and South Korea signed a nuclear agreement, its 12th such agreement and is expected to be ratified by the Japanese Diet.

The government expects the agreement to increase exports of nuclear-related parts and equipment. South Korea is seen as a promising partner as it is stepping up construction of nuclear power plants.

The Sumitomo Group Companies announced today a plan to establish a 30 billion yen fund in January to invest in domestic firms holding promise of growth.

The fund, to be created by funds from Sumitomo Mitsui Financial Group Inc, Sumitomo Corp and Sumitomo Trust & Banking Co, will target non-group companies as well by purchasing common stocks, preferred shares, equity warrants and convertible bonds.

Japan’s Foreign Ministry appointed 69 officials working at 56 of its diplomatic missions across the world as infrastructure project specialists tasked with gathering information about initiatives in the country’s of their posting.

The task includes collecting details of demand for developing rail systems, nuclear power plants and other such infrastructure projects in emerging nations and upgrades of these in developed nations.

Smartphones will be the driving force of the domestic market’s growth in mobile telephony through fiscal year 2015, Nomura Research Institute wrote in its technology outlook released on Monday.

Nomura estimated shipments to climb to 45.7 million phones by 2015, up 43% from the expected sales in the current fiscal year, with smartphones making up more than 70% of the total.

Shinsei Bank said on Monday it plans to transfer its entire holding of common stock in consumer lender Aplus Co to another subsidiary, Shinsei Financial Co, as part of its reorganization efforts.

The Tokyo-based bank, which holds currently 94.9% of Aplus’ common shares, expects to book a special loss of 31.7 billion yen for the transfer.

Stock Movers

Euro-linked shares gained sharply after the euro climbed against both the dollar and the yen.

Fanuc Ltd, the largest maker of industrial robots, added 2.22% to 12,420 yen and Sony Corp rallied 2.7% to 3,010 yen. Nikon gained 2.8% to 1,670 yen and Canon Inc rose 1.6% to 4,185 yen.

Japan Tobacco surged 3.97% to 303,500 yen after UBS AG and Citigroup both boosted their stock-price estimates of the company.

Tokai Carbon Co also added 3.45% to 510 yen after being upgraded by Credit Suisse Group AG to ‘outperform.”

Murata Manufacturing added 4.43% to 5,660 yen on hopes of higher part sales for smartphones.