Manufacturing Index Soars in Japan; Nikkei Jumps 1.5%

Nigel Thomas
29 Jun, 2011
New York City

The Nikkei index soared 1.5% and extended gains for the second day on the sharp recovering in domestic manufacturing and improving sentiment in the euro-zone. Retailers advanced for the third day in a row on improved retail outlook. Autos and electronics makers led the gainers.

[R]4:30 PM Tokyo – The Nikkei index soared 1.5% and extended gains for the second day on the sharp recovering in domestic manufacturing and improving sentiment in the euro-zone. Retailers advanced for the third day in a row on improved retail outlook. Autos and electronics makers led the gainers.[/R]

The benchmark index extended gains for the second day in a row as Greek worries eased ahead of austerity vote scheduled today. Sharp production recovery in May also bolstered manufacturing related stocks. Utilities stocks were in focus as well.

Investors are increasingly focusing on the pace of recovery after the triple disaster in March.

The latest data from the Ministry of Economy, Trade and Economy showed manufacturing soared 5.7% in May from April, the fastest pace since 1953.

Steelmakers, retailers and auto and electronics makers rose as companies for the second day in a row.

Investors tiptoed in the market as Greece faces a 2-day strike as lawmakers debate austerity measures conditions.

In overnight trading, U.S. and European markets closed higher on the optimism that Greece will pass the latest demands from the European Union and the IMF to access the latest tranche of bailout funds.

The Nikkei 225 Stock Average increased 1.5% to 9,797.26 and the broader Topix index added 1.7% to 844.11.

Tokyo trading volume fell to 1.67 billion shares from 1.7 billion shares in the previous session. Advancers led the decliners by 1,357 to 198.

The yen eased to 81.20 from 80.70 against one dollar and to 116.75 from 115.77 against one euro.

Stock Movers

Canon Inc increased 2.1% to 3,820 yen and Fanuc added 3.6% to 13,430 yen after the yen eased against the euro and the Greece related worries eased.

Banks closed higher after the euro-zone debt contagion worries receded.

Sumitomo Mitsui Financial Group increased 1.2% to 2,437 yen and Mizuho Financial Group Inc added 2.3% to 131 yen.

Trading companies gained as resources linked stocks climbed. Mitsubishi Corp increased 0.9% to 1,990 yen, Mitsui & Company gained 2.1% to 1,384 yen and Inpex Corp increased 2.1% to 589,000 yen.

Utilities companies advanced after Nikkei business daily reported opposition Liberal Democratic Party may ask government not to force other utilities to participate in disaster compensation scheme.

Chubu Electric Power Co added 4% to 1,533 yen and Kyushu Electric Power Co increased 5% to 1,379 yen.

Automakers closed higher after a sharp recovery in manufacturing was reported by the government.

Toyota Motor Corp increased 1.7% to 3,270 yen and Nissan Motor Company Limited added 2.7% or 22 yen to 847 yen. Honda Motor Company Ltd added 1.85 to 3,095 yen.

Retailers closed higher after J Front Retailing revised its outlook two days ago. J Front increased 0.9% to 253 yen and Isetan Mitsukoshi Holdings increased 2.4%. Takashimaya added 1.5% to 555 yen.