Nikkei Rebounds 5.7% in Cautious Trading; Tokyo Electric Power Drops 24%

Nigel Thomas
16 Mar, 2011
New York City

Tokyo stocks rebounded 6% after investors took a calmer view and worries of a nuclear radiation leak receded at least for now. The gains were trimmed after another strong aftershock in Chiba Prefecture and a talk of another fire at the troubled nuclear power plant. Tokyo Electric dropped 24%.

[R]5:00 PM Tokyo – Tokyo stocks rebounded 6% after investors took a calmer view and worries of a nuclear radiation leak receded at least for now. The gains were trimmed after another strong aftershock in Chiba Prefecture and a talk of another fire at the troubled nuclear power plant. Tokyo Electric dropped 24% extending 42% losses of the last two days.[/R]

Stocks in Tokyo rebounded on Wednesday after a two-day selloff that saw severe losses last seen only 24 years ago.

The sentiment recovered after worries related to nuclear radiation leaks receded but investors held back buying shares in the afternoon after the news of another fire at the troubled Fukushima nuclear power plant and a strong aftershock in Chiba Prefecture.

The Nikkei 225 Stock Average rebounded 5.7% or 488.57 to 9,093.72 and the broader Topix index gained 6.6% to 817.63.

Despite the today’s rebound the market sentiment in Tokyo trading was fragile and investors looked at the development at the Fukushima Dai-Ichi nuclear power plant.

The Bank of Japan added liquidity for the third day in a row to calm financial markets and continued buying short term bonds.

The yield on the 10-year Japanese government bond increased 0.015 percentage points to 1.225%.

Stock Movers

The rebound in the market was broad and exporters, automakers and electronics companies led the gainers.

Toyota Motor soared 9.1% to 3,345 yen, Honda Motor added 3.9% and Nissan Motor gained 6.2% to 741 yen.

Sony Corp added 8.8% to 2,528 yen and Hitachi rebounded 16.6% to 422 yen after dropping for two days in a row by its daily limit of 80 yen. Panasonic added 7.4% 930 yen.

Mizuho Financial Group gained 5.4% to 137 yen and Mitusbishi UFJ Group increased 4.4% to 381 yen and Sumitomo Mitsui Financial Group increased 3.2%.

Tokyo Electric Power declined for the third day in a row and lost another 25% today to 921 yen after losing 42% in the last two days.

The electric utility began rolling blackout that will continue till the end of April to conserve power as it battles the nuclear radiation leak. The power company needs a steady supply of electricity to cool down the reactors and prevent the meltdown of nuclear fuel rods.