Nikkei Falls 1.5%; Exchanges in Tokyo and Osaka to Explore a Merger

Nigel Thomas
10 Mar, 2011
New York City

Tokyo indexes closed lower after China reported its first monthly trade deficit and Libya remained in focus. Japan revised its last quarter economic decline to 1.3% from the previous estimate of 1.1% fall. Tokyo Stock Exchange Group and Osaka Securities Exchange are reported to explore a merger.

[R]5:00 PM Tokyo – Tokyo indexes closed lower after China reported its first monthly trade deficit and Libya remained in focus. Japan revised its last quarter economic decline to 1.3% from the previous estimate of 1.1% fall. Tokyo Stock Exchange Group and Osaka Securities Exchange are reported to explore a merger combination.[/R]

Tokyo stocks fell after China reported its first monthly trade deficit in more than a year and crude oil prices rebounded as fighting in Libya intensified.

The prospect of early settlement to popular unrest in Middle East and North African countries are dimming and investors are worried that sustained increase in oil price will spark worldwide inflation and slow down the global recovery.

Japan revised its last quarter to December economic shrinkage to 1.3% annual rate from the previous estimate of 1.1% fall.

The Nikkei 225 Stock Average declined 1.5% or 155.12 to 10,434.38 and the broader Topix index declined 1.4% to 930.84.

Trading volume on the main board of the Tokyo Stock Exchange declined to 1.95 billion shares and 1,436 shares fell and 158 increased.

The benchmark index declined to 5-week low and semiconductor index declined 3% in New York trading after Texas Instruments reported weaker than expected outlook.

Nymex crude oil price traded near $105 a barrel and Brent crude oil increased to $116 a barrel after Libyan forces bombed the oil infrastructure near Ras Lanuf to break the stronghold of rebels.

Tokyo Stock Exchange Group and Osaka Securities Exchange to Explore Merger

Osaka Securities Exchange Co soared 7% to 460,000 yen after the regional exchange is expected to initiate formal business integration talks with the Tokyo Stock Exchange as early as next month.

Both exchanges earlier denied media reports quoting the news in the Nikkei newspaper and the Osaka Exchange surged as much as 12% in the early trading.

Tokyo Stock Exchange Group Inc president Atsushi Saito said in an interview that the exchange will prepare public offering after it reports earnings for the year ending March.

Tokyo stock exchange is caught in a merger fever sweeping world as markets in China, India rise and European exchanges consolidate and merge with North American exchanges.

Tokyo exchange has struggled with several trading outages in the last three years as it struggles to integrate new and faster trading technologies and derivatives markets have expanded in the recent years.

Stock Movers

Investors avoided growth stocks and sought refuge in dividend paying utilities. Tokyo Electric Power increased 0.5% to 2,153 yen.

Weaker than expected outlook from Texas Instruments dragged Tokyo Electron lower 2.3% to 5,160 yen and Sumco fell 2.9% to 1,450 yen.

IHI Corp declined 2.3% to 212 yen and the engineering company said in a filing that it plans to sell five-year convertible bonds of 20 billion yen.

Isetan Mitsukoshi Holdings Ltd declined 1.5% to 938 yen after it said in a filing with the exchange that operating profit is estimated to increase to 30 billion yen in the fiscal year ending March 2014.

Ohara Inc decreased 3.2% to 998 yen after the company said quarterly net for the three months to January dropped 84% to 75 million yen.

Nippon Sheet Glass Co. declined 1.7% to 238 yen and said it plans to invest 10 billion yen to expand its automotive glass manufacturing capacity in Poland.