Bank of Japan Adds Japanese Equities; Yen Strengthens to 79

Nigel Thomas
13 Jul, 2011
New York City

Japanese stocks rebounded after the Bank of Japan stepped its purchase of Japanese equities and stronger than expected economic expansion in China. The yen strengthened for the third week in a row and traded below 79 to a dollar and 110 to one euro.

[R]4:00 PM Tokyo – Japanese stocks rebounded after the Bank of Japan stepped its purchase of Japanese equities and stronger than expected economic expansion in China. The yen strengthened for the third week in a row and traded below 79 to a dollar and 110 to one euro.[/R]

Stocks in Japan closed higher after the central bank stepped up its efforts to support stock market.

The Bank of Japan increased its holding of basket of stocks in the index through the purchase of exchange-traded funds. The central bank has been buying stocks when the Nikkei index declined 1% or more.

The Bank of Japan purchased 22.1 billion yen in Japanese exchange traded funds on Tuesday.

The Nikkei 225 Stock Average increased 0.4% to 9,963 and the index came under pressure in the early trading after Ireland debt was downgraded by a rating agency.

The broader Topix index added 0.4% to 860.19. Investors are worried that if the yen trades below 79 yen to a dollar for more than a week the benchmark index may drop another 2%.

The yen rose as high as 78.90 but closed at 79.40 against one dollar and gained to 111.38 after dropping to 110.98.

Stock Movers

Chip makers declined after Microchip Technology Inc dropped 12% in New York trading. Advantest Corp declined 0.9% to 1,515 yen and Tokyo Electron fell 1.1% to 4,320 yen.

Trading companies gained after commodities and resources linked stocks advanced.

Mitsui & Company added 2.3% to 1,435 yen and the company offered higher price for Singapore port operator Portek International than the current bid from Philippines based International Container Terminal Services Inc.

Stocks linked to exports and China gained.

Sony Corp increased 0.6% to 2,149 yen and Honda Motor Corp added 0.2% to 3,175 yen. Nikon Corp decreased 2.7% to 1,810 yen.

Komatsu added 0.8% to 2,480 yen and Fanuc Corp gained 1.3% to 14,050 yen.

The rise in crude oil prices also lifted oil explorer and refiner.

Inpex Corp increased 2.1% to 596,000 yen and Japan Petroleum Exploration Co added 1% to 3,925 yen.