Nikkei in Japan Rally as Investors See Low Inflation Risk, Auto Sales Drop 12%

Nigel Thomas
01 Mar, 2011
New York City

Stocks in Japan closed higher for the second day as foreign investors see low risk of sharp rise in inflation. The benchmark Nikkei index added 2.9% in two days and export sensitive stocks led gainers. Automakers closed up. Dentsu jumped 5% after it was appointed to represent Facebook in Japan.

[R]5:30 PM Tokyo – Stocks in Japan closed higher for the second day as foreign investors see low risk of sharp rise in inflation. The benchmark Nikkei index added 2.9% in the 2-day rally and export sensitive stocks led gainers. Automakers Toyota, Honda and Nissan gained. Dentsu jumped 5% after it was appointed to represent Facebook in Japan.[/R]

Stocks in Japan closed higher for the second day as sentiment improved and prospects of higher exports brightened after better than expected U.S. economic data.

Foreign investors also bid up stocks as tension in the Middle East and North Africa remains high. Japan is one of the few countries in Asia that is likely to weather better than most economies in the region the fuel and food price lead inflation.

The Nikkei 225 Stock Average increased 129.94 or 1.2% to 10,754.03 and the broader Topix index gained 1.3% or 12.43 to 963.70

The Nikkei has rebounded 2.9% in the last three days as foreign investors add exposure to Japan.

The yen eased to a dollar in the afternoon trading and closed at 82.20.

After the close automakers reported auto sales data. Total vehicle sales in February including mini-cars fell 12.4% in February to 401,292 units.

Honda sales declined 16.1% and Nissan Motor sales dropped 7.8%. Toyota Motor sales drop of 21.3% led the industry decline.

Stock Movers

The stronger that expected U.S. regional business confidence survey lifted stocks of exporters and automakers.

Nissan Motor increased 2.6% to 857 yen and Bridgestone increased 3.8% to 1,737 yen. Toyota Motor gained 0.9% to 3,855 yen and Honda Motor increased 1.8% to 3,610 yen.

Banks closed higher. Shinsei Bank added 7.7% to 112 yen after the company said it will raise as much as 69.4 billion shares.

Mitsubishi UFJ Financial Group increased 3.3% to 468 yen and Sumitomo Mitsui Financial Group increased 3.2% to 3,185 yen after the bank confirmed that it plans to buyback and retire its preferred shares worth 210 billion yen.

Dentsu increased 4.9% to 2,723 yen after the advertising giant confirmed that it will act as advertising representative for Facebook in Japan.

Mitsubishi Heavy Industries increased 4.6% to 363 yen on two separate orders news. Nikkei reported that company won order to build a liquefied gas tanker for Nippon Yusen KK and won a contract to build 49 turbines for micro-power stations maker AES Corp based in the U.S.