Japan Halts 7-day Rally; Renewed Power Supply Worries

Nigel Thomas
07 Jul, 2011
New York City

Stocks in Japan halted a 7-day rally after fresh power supply worries. Trade ministry asked all nuclear power plants to undergo a stress test that may delay the resumption of many power plants and extend rolling power cuts this summer.

[R]4:00 PM Tokyo – Stocks in Japan halted a 7-day rally after fresh power supply worries. Trade ministry asked all nuclear power plants to undergo a stress test that may delay the resumption of many power plants and extend rolling power cuts this summer.[/R]

Stocks in Japan rested after rising for seven days in a row as trade ministry ordered more tests for nuclear power plants. The new stress tests will force all 54 nuclear power plants that generate nearly 30% of power to delay their openings.

The move is likely to extend rolling power cuts in summer months and prompted concerns that power rates may have to be increased by 20% to recover the alternative fuel cost.

Economy, Trade and Industry Minister Banri Kaieda said on Wednesday the ministry will conduct stress test on nuclear plants and determine their viability in the face of another severe natural disaster.

The results of tests will not determine if and when the plants are restarted but municipal governments will decide the fate of these plants, according to a news report published on Nikkei.com.

The Nikkei 225 Stock Average declined 0.1% to 10,071.14 after the index gained 5.3% in the last seven sessions and traded above 10,000 for the third time in two months.

The broader Topix index fell 0.4% to 870.48 after rising for seven days in a row.

Tokyo Stock Exchange first section trading volume increased to 1.86 billion shares from 1.82 billion shares on Tuesday. Advancers led decliners by 1,085 to 401.

The yen fell to 81.15 from 80.70 against one dollar and to 117.20 from 116.95 against one euro.

Stock Movers

Electric utilities were among the leading decliners. Several regional electric utilities dropped more than 6%.

Kansai Electric dropped 8.4% to 1,452 yen and Kyushu Electric Power Co. dropped 7.5% to 1,349 yen. Chubu Electric Power Co. dropped 7% to 1,442 yen.

Industrials and automakers closed lower on the fresh worries of power constraint in the summer months.

Toyota Motor Corp decreased 0.7% to 3,400 yen and Honda Motor Corp dropped 0.9% to 3,215 yen. Nissan declined 1.6% to 863 yen.