Japan CPI Decline Slows; Nikkei Falls 2.9% in the Week

123jump.com Staff
25 Feb, 2011
New York City

Nikkei in Tokyo rebounded after oil declined and Saudi Arabia pledged to increase supply. Consumer prices declined at the smallest pace in January since April 2009 but economists warned that cost driven inflation is not good for economy. Nikkei rose Friday and lost 2.9% in the week.

[R]5:00 PM Tokyo – Stocks in Tokyo rebounded after crude oil declined and Saudi Arabia and West Africa nations pledged to increase supply. Consumer prices declined at the smallest pace in January since April 2009 but economists warned that cost driven inflation is not good for economy. Nikkei rose Friday and lost 2.9% in the week.[/R]

The benchmark indexes in Japan edged higher after crude oil futures declined. The pledge from Saudi Arabia and West African nations to increase supplies to meet any shortfall from Libya lowered the oil price at close.

The International Energy Agency said that the rebellion in Libya may not have impacted oil production as much as feared earlier. The agency controlled by western nations said it will release oil from its stockpiles to offset any shortfall from production cut in Libya.

The Nikkei 225 Stock Average increased 0.5% or 55.21 to 10,507.92 and the broader Topix index also added 0.5% to 938.73.

For the week Nikkei declined 2.9% and Topic fell 3.3%.

The index gained for the first time in four days as international investors resume the stock buying in Tokyo. The index is expected to face some pressure in the short term but likely to show healthy gain this year.

Japan consumer price index declined 0.2% in January from a year ago after dropping 0.4% in December. The core price index has declined for 23rd month in a row.

The preliminary inflation in February in Tokyo area declined 0.1% and food and housing prices also declined by the same.

The nationwide price decline in January was the smallest since April 2009 and margin of decline shrank for the fourth month in a row. The price of commodities and food prices have been on the rise as demand increase in emerging markets.

Stock Movers

Ajinomoto Co increased 2.3% to 928 yen after the seasonings maker said its operating profit are expected to increase 26% on the growth in the international business beginning April 2013.

Elpida Memory Inc increased 6% to 1,211 yen after the DRAM memory maker said prices are expected to rise as much as 20% in the second quarter as inventories run low and new orders drive demand.

Toyota Motor increased 2% to 3,750 yen and the automaker recalled 2.2 million vehicles in the U.S. to fix floor mats that could trap gas pedal. The stock closed higher after positive comments from Credit Suisse.

Other automakers also closed higher after crude oil declined. Nissan Motor Co. added 0.7% to 838 yen and Honda Motor Co gained 1.9% to 3,539 yen.

Exporters gained in the market rebound. Sharp added 2% to 885 yen, Sony increased 1.2% to 2,967 yen and Nintendo Co jumped 3.5% to 25,000 yen.

Banks closed higher on positive trading environment. Mizuho increased 1.9% to 165 yen and Mitsubishi UFJ Financial Group increased 0.7% to 450 yen and Sumitomo Mitsui Financial Group Inc added 0.7% to 3,060 yen.