Nikkei in Japan Drops 1.2%; Tobu Plunges 12%

Nigel Thomas
24 Feb, 2011
New York City

Japan benchmark index declined for the third day in a row and nearly wiped out half the gains of the year as crude oil reached 30-month high. Overseas investors added Japan stocks for the 16th week in a row. Tobu, railroad operator plunged after it announced a plan to raise $1.1 billion.

[R]4:00 PM Tokyo – Japan benchmark index declined for the third day in a row and nearly wiped out half the gains of the year as crude oil reached 30-month high. Overseas investors added Japan stocks for the 16th week in a row. Tobu, railroad operator plunged after it announced a plan to raise $1.1 billion.[/R]

Stocks in Japan closed lower after crude oil prices touched $100 a barrel and unrest continue to spread in the Middle East and North Africa.

World markets were on the slide on the worries that unrest could spread to more oil producing nations as Bahrain, neighboring Saudi Arabia struggles with protests.

Crude oil closed at 30-month high in New York and London trading.

The Nikkei 225 Stock Average declined 1.2% to 10,452.71 and the broader Topix index dropped 1.3% to 934.22. The yen closed at 82.02 after rising as high as 81.98.

Trading volume on the first section of the Tokyo Stock Exchange increased to 2.6 billion shares from 2.55 billion yesterday and above 2 billion shares for the fourteenth day in a row.

Overseas investors increased their purchase of Japan stocks for the 16th week in a row according to the data compiled by Reuters, marking the longest period of purchase since 2006.

Stock Movers

CSK Corp soared 14.6% to 393 yen after the Nikkei news reported that Sumitomo Corp plans to increase its stake in the company to a majority from the current holding of 36%.

Tobu, the railroad operator dropped 12.1% to 400 yen after the company said it plans to raise as much as 93 billion or $1.1 billion. The capital offering will increased outstanding shares by 25% and the funds will help to repay 2014 maturing convertible bonds.

Toyobo dropped 9% to 134 yen after the company announced a plan to raise $225 million and increase its outstanding shared by 18.7%.

Automakers led the decliners. Toyota Motor declined 1.7% to 3,675 yen and Honda Moto Co. fell 1.4% to 3,475 yen and Mazda Motor Corp dropped 1.4% to 210 yen.

Shipping lines declined after freight rate index in London trading fell for the third day in a row.

Nippon Yusen fell 2.5% to 359 yen and Kawasaki Kisen Kaisha Ltd dropped 2.5% to 347 yen.