Nikkei Gains 1.3%, Yen Nears 4-month High; Fanuc, Mitsubishi UFJ Up

Nigel Thomas
01 Aug, 2011
New York City

Stocks in Japan closed higher on the hopes that the U.S. lawmakers will approve the debt framework agreed by the leaders of the Senate, the House and the White House. The yen hovered near its record high. Exporters and electronics makers gained.

[R]4:30 PM Tokyo – Stocks in Japan closed higher on the hopes that the U.S. lawmakers will approve the debt framework agreed by the leaders of the Senate, the House and the White House. The yen hovered near its record high. Exporters and electronics makers gained.[/R]

Stocks in Japan tracked the gains in Asian markets after the U.S. lawmakers agreed on a framework to cut spending and increase debt in two steps. The tentative agreement still needs approvals from the Senate and the House.

The deal was widely hailed as a success by the extreme segment of the Republican Party and most economists worried that the government spending cuts will only weaken the employment market in the immediate months. The lack of increase in taxes will also hamper the government spending and may worsen the debt in the long term.

The Nikkei 225 Stock Average increased 1.3% to 9,965.01 and the broader Topix index rose 1.2% to 851.70. The Nikkei index rose as high as 10,040.13.

Trading volume jumped above the average of the last week to 1.9 billion shares.

The yen eased to 77.69 from 77.28 but traded above 4-month low of 76.70. The yen also hovered near 111.38 against one euro.

Stock Movers

Denso Corp, the auto parts maker, added 3% to 2,833 yen after increasing its first half net profit estimate to 9 billion yen from the previous estimate of 1 billion yen.

Industrials and capital equipment makers increased as jitters subside that the U.S. debt agreement may be ratified by the Senate and the House.

Fuji Electric added 4.4% to 262 yen after a media report indicated that the company’s new gadget will detect radiation in fresh food without removing packaging.

Honda Motor increased 1.5% to 3,125 yen and Fanuc Corp added 4.5% to 15,280 yen. Fanuc was also boosted on the hopes that China sales will improve as the manufacturing transitions to more automated assembly lines.

Hitachi Construction Machinery extended gains for the second day in a row by 2% to 1,775 yen after China reported July manufacturing index showed a slight decline in expansion.

Mitsubishi UFJ Financial increased 4.1% to 408 yen after the bank reported first quarter profit increased to 501 billion yen that included gain of 291 billion yen from the conversion of Morgan Stanley preferred share into common stock.

NTT DoCoMo added 1.6% to 143,800 yen after the company said first quarter profit increased 12% to 158 billion yen.

Toto Ltd added 6.1% to 640 yen after the company lifted its full-year outlook by 18% to 13 billion yen in net income.