Nikkei in Japan Extends Losses; Right On Surges 17%

Nigel Thomas
23 Feb, 2011
New York City

Stocks in Japan extended losses for the second day as crude oil surges and investors worry of the growing contagion in the Middle East. The Nikkei index declined 0.8% and fell 1.8% in the last two days of trading. Automakers, exporters and banks closed lower.

[R]4:30 PM Tokyo – Stocks in Japan extended losses for the second day as crude oil surges and investors worry of the growing contagion in the Middle East. The Nikkei index declined 0.8% and fell 1.8% in the last two days of trading. Automakers, exporters and banks closed lower.[/R]

Stocks in Japan extended losses for the second day this week and struggled to hold the gains of the year as investors shift focus on a sharp rise in crude oil prices and its impact on nascent global economic recovery.

The supply shock has fueled speculation that the nascent recovery in the U.S. economy may be brought to a halt with the sustained rise in energy prices.

Crude oil traded near 30-month high despite Saudi Arabia issuing a statement later in the evening yesterday. The meeting of oil producing and consuming nations lead to a pledge from Saudi Arabia to lift the production if needed.

Libya ships 1.6 million barrels a day and nearly 85% of its crude is shipped to Europe and close to the third is shipped to Italy.

Saudi Arabia has enough spare capacity to meet any disruption in supply from Libya and so far only 1% oil from Libyan oil production has been halted.

The Nikkei 225 Stock Average decreased 0.8% or 85.60 to 10,579.10 and the broader Topix fell 1% to 946.88.

The trading volume on the first section of Tokyo Stock Exchange rose to 2.6 billion shares, above 2 billion shares for the thirteenth day in a row.

The yen closed up to 82.52 to a U.S. dollar.

Stock Movers

Energy sensitive and Middle East linked stocks closed higher. Inpex Corp dropped 4.1% to 566,000. JGC Corp, the engineering contractor, soared 2% to 1,844 yen after it confirmed that Middle East turmoil has not seen any decline in revenues from the Mideast tensions.

Exporters and international companies declined. Komatsu Ltd fell 1.8% to 2,450 yen and Sony Corp dropped 1.9% to 2,977 yen.

Right On Co. surged its daily limit of 80 yen or 17% to 538 yen after the retailer of jeans and casual wear said same-store sales increased 3.4% in 30-day period ending on February 20. The increase was first monthly rise since November 2008.