Nikkei Declines Second Day; Japan Oders Nuclear Plant Closure

Nigel Thomas
09 May, 2011
New York City

Investors sold stocks in Tokyo for the second day in a row on uncertainty related to power supply in central Japan. Prime Minister Naoto Kan ordered the temporary shutdown of a nuclear power plant in an earthquake prone zone. Chubu Electric dropped 10%. Kirin and Yamaha declined on earnings worries.

[R]5:10 PM Tokyo – Investors sold stocks in Tokyo for the second day in a row on uncertainty related to power supply in central Japan. Prime Minister Naoto Kan ordered the temporary shutdown of a nuclear power plant in an earthquake prone zone. Chubu Electric dropped 10%. Kirin and Yamaha declined on earnings worries.[/R]

Stocks in Japan declined for the second day in a row after Prime Minister Naoto Kan requested a closure of second nuclear power plant.

The Nikkei 225 Stock Average declined 0.7% to 9,794.38 and the broader Topix index fell 0.4% to 853.21.

Chubu Electric Power Co. said after a board meeting that it has agreed to temporarily halt operations at its Hamoka nuclear power plant on safety concerns. The power plant located in central Japan provides electricity to industrial areas where several automotive and engineering companies are operating.

The government requested the temporary shut down of the Hamoka plant because of its location and a government study indicated that the plant is 87% likely to be hit with a large earthquake in the next thirty years.

The plant located at 125 miles southwest of Tokyo in Shinzuoka Prefecture and close to a fault line that may be susceptible to 8.0 or higher magnitude of earthquake in the next three decades.

Chubu Electric said operations at reactors 4 and 5 would be suspended and restart of the reactor 3 would be halted. The company will also begin the decommissioning of the deactivated reactors 1 and 2.

Stock Movers

Chubu Electric plunged 10% to 1,584 yen and led the decliners in the benchmark Nikkei index.

Tokohu Electric declined 2.1% to 1,205 yen after the Asahi newspaper speculated that the utility company may post a loss in the fiscal year ending in March.

Automakers declined after the uncertainty related to power supply in the Aichi prefecture. Toyota dropped 0.5% to 3,195 yen and Nissan Motor Co dropped 1.3% to 767 yen.

Fast Retailing declined 4% to 12,310 yen after the apparel retail chain operator said same store sales declined 1.2% in April.

Yamaha declined 5.8% to 936 yen after the company estimated 24% decline in operating profit to 10 billion yen in the current fiscal year.

Volatility in euro-zone and worries related to Greece led Europe linked companies decline. Nintendo Co. dropped 1.58% to 19,430 yen and Nippon Sheet Glass Co. declined 0.76% to 242 yen.

Kirin declined 4% to 1,094 yen after the company reported a loss of 2.11 billion yen in the quarter to March on a one time charge of 5.1 billion yen related to its Sendai factory earthquake damage.