Nikkei in Tokyo Gains 1.1%; Interest Rates on Hold

Nigel Thomas
14 Jun, 2011
New York City

The benchmark index in Tokyo increased 1.1% after Japanese government approved the scheme to compensate nuclear disaster victims and Bank of Japan unveiled a $6 billion loan program for the earthquake affected region. Separately the central bank also left the rates and asset buying program on hold.

[R]4:45 PM Tokyo – The benchmark index in Tokyo increased 1.1% after Japanese government approved the scheme to compensate nuclear disaster victims and Bank of Japan unveiled a $6 billion loan program for the earthquake affected region. Separately the central bank also left the rates and asset buying program on hold.[/R]

Stocks in Japan rebounded after the government approved a scheme to compensate the victims of nuclear power plant disaster. The Bank of Japan left its key lending rate unchanged and unveiled a 500 billion yen loan plan to help the earthquake-hit region.

The sentiment was also bolstered after China reported a surge in retail sales, industrial production and rising demand lifted inflation in May to 5.5%. Industrial production soared 13.3% and retail sales soared 16.9% from a year ago.

The Nikkei 225 Stock Average increased 1.1% to 9,547.79 and the broader Topix index added 1.3% to 822.86.

Tokyo trading volume increased to 1.94 billion shares from the 1.6 billion share average trading volume in the last one month of trading.

The yen strengthened to 79.98 from 80.65 against one dollar and rose to 113.47 from 116.40 against one euro.

The Bank of Japan left its benchmark interest rate target between zero and 0.1% and kept unchanged its 30 trillion yen lending program and 10 trillion yen bonds and stocks buying program.

Separately, the central bank also unveiled a 500 billion yen loan program to help the region affected by the earthquake on March 11.

Stock Movers

Tokyo Electric Power Co soared 25% to 249 yen after the government approved the scheme to compensate victims of nuclear power plant disaster. The scheme still needs to be passed by the divided parliament.

Also, the Tokyo Stock Exchange lifted collateral requirement for short selling of Tepco shares to 50% from 30%.

Other utilities increased as well. Kansai Electric Power Co increased 10% to 1,277 yen and Chubu Electric Power Co soared 13% to 1,307 yen.

Chubu Electric and Marubeni are likely to win an order to build and manage a natural gas power plant in Oman that may cost as much as $1.5 billion. The news was first reported by the Nikkei newspaper.

Banks closed higher after the government approved the scheme to compensate Tepco disaster victims. Sumitomo

Financial Group increased 2.2% to 2,345 yen and Mitsubishi UFJ Financial Group added 2.2% to 372 yen. Mizuho Financial Group gained 1.6% to 124 yen.

China’s strong economic data lifted machinery makers stocks. Fanuc increased 1.7% to 12,350 yen and Komatsu Ltd increased 1.3% to 2,319 yen.