Nikkei Drops 1%; Auto Insurance Hike Approved

Chandrasekhar Atreya
20 Jan, 2011
New York City

Japanese stocks indexes declined 1% to 45-day low. Commercial banks were the net buyers of long-term corporate and municipal bonds for the first time in two months. Financial Services Agency endorses a hike in compulsory auto liability insurance policy by 11%.

[R]5:00 PM Tokyo, Japan – Japanese stocks indexes declined 1% to 45-day low. Commercial banks were the net buyers of long-term corporate and municipal bonds for the first time in two months. Financial Services Agency endorses a hike in compulsory auto liability insurance policy by 11%.[/R]

Stocks in Tokyo fell in trade pushing the benchmark index to its lowest level since November 30, after oil and metal prices dropped.

The Nikkei 225 Stock Average slipped 1.13% or 119.79 to close at 10,437.31. The broader Topix dropped 1% to 927.19. Both gauges have retreated the most since November 30, 2010.

The yen closed at 82.17 to a dollar and 110.38 to a euro in Tokyo today.

Commercial Banks in Japan were net buyers of corporate and municipal bonds in December for the first time in two months, the Japan Securities Dealers Association said today.

The banks bought a net 2.18 trillion of these bonds, excluding short-term securities. The market turned bullish towards the end of December, helped by the yen’s strength against the dollar.

The Financial Services Agency endorsed a plan today to hike premiums on compulsory auto liability insurance policies as accident rates rise.

According to the revised plan, premiums on two-year coverage for a passenger car, except for Okinawa and remote islands, will be raised 11% to 24,850 yen from the current 22,470 yen.

The Financial Services Agency will also give companies more choices when planning capital increases under its new proposals to ease rules on rights issues along the lines of rules in Europe.

Toshiba Corp has agreed to work with Rolls-Royce Plc and two other U.K. heavy machinery equipment manufacturers to win a nuclear power contract.

The consortium of Toshiba Corp, Westinghouse Electric Co, Shaw Group Inc and Laing O’Rourke of U.K, have signed an agreement with Rolls-Royce, BAE Systems Plc and Doosan Power Systems Ltd to jointly secure a contract from Horizon Nuclear Power to build three of Westinghouse’s new AP 1000 midsized nuclear reactors in U.K.

Mitsubishi Electric Corp said Wednesday it plans to spend 10 billion yen to build a facility to boost its output of power steering products from the current 7 million units to 12 million by 2012.

The company plans to start construction of the new facility in Hyogo Prefecture from July and estimates its completion in a year to start production in August 2012.

Mitsui & Co said Wednesday it has obtained through a private placement, a 25% stake in CCTV Shopping Co, a Beijing-based supplier of goods and services to television home shopping operators in China.

Mitsui will supply goods and Japanese expertise in the field to the firm, which is a member of state-run China Central Television Group.

Stock Movers

Mitsubishi Corp fell 0.92% to 2,379 yen and Canon Inc declined 2.26% to 4,100 yen.

Tokyo Electron Ltd, the world’s second largest semiconductor equipment maker, fell 3.83% 5,530 yen while TDK Corp dropped 2.71% to 5,740 yen.

Among real estate firms, Mitsui Fudosan Co fell 2.17% to 1,759 yen and Mitsubishi Estate Co declined 2.51% to 1,630 yen.

Oji Paper Co added 1.29% to 394 yen while Nippon Paper Group gained 89% 2,153 yen.

Keisei Electric Railway Co added 1.22% to 580 yen while Central Japan Railway Co gained 1.18% to 686,000 yen.