Nikkei With 2.1% Loss Falls to One-Month Low; Kirin, Ibiden, Idemitsu Down

Nigel Thomas
03 Aug, 2011
New York City

Japanese stocks fell 2% following a worldwide sell-off. The U.S. debt accord failed to allay the long term debt worries and the stress in the euro-zone sovereign bond markets rose to a new high with Italy in focus. The yen flirted near a record high and the U.S. sales of Honda and Toyota lagged.

[R]4:30 PM Tokyo – Japanese stocks headed lower following a worldwide sell-off. The U.S. debt accord failed to allay the long term debt worries and the stress in the euro-zone sovereign bond markets rose to a new high with Italy in focus. The yen flirted near a record high and the U.S. sales of Honda and Toyota lagged expectations.[/R]

Stocks in Tokyo trading declined after the yen gained global economic worries resurfaced. The market sell-off was muted only because of the widespread expectations of the intervention by the Bank of Japan in the currency market.

The latest U.S. debt accord will avoid the default crisis but the largest economy in the world is facing a debt rating downgrade. In Europe, record bond yields in Italy and Span sparked worries that the debt contagion may ensnare Italy.

Italian bonds the most widely held bonds in Europe after Germany and nearly 90 banks hold more than 325 billion euros of debt, according to the European Banking Authority.

Spain is scheduled to raise as much as 3.5 billion euro tomorrow and the yields on 10-year bonds have shot up to 6.21% after rising as high as 6.45% on Tuesday.

The Nikkei 225 Stock Average dropped 2.1% to 9,637.14 and the broader Topix index fell 2% or 17.21 to 826.75.

The yen eased to 76.89 from 76.29 against one dollar and to 111.28 from 111.05 against one euro. The yen traded at 76.25 to a dollar on March 17 and is trading at less than 3% away from a record in the last seven decades.

Stock Movers

Electronic chip makers closed lower today after Tokyo Electron lowered its outlook two days ago and exporters fell as the yen traded near 4-month high.

Fujitsu Ltd decreased 3.3% to 439 yen after the company plans to purchase its mobile phone venture with Toshiba Corp as early as next year.

Eisai decreased 3.3% to 3,090 yen after first quarter net declined 28%.

Honda Motor Co decreased 3.2% to 3,010 yen after the third largest Japanese automaker said U.S. sales declined 28% to 80,502 units in July. Earlier the automaker also lifted its annual earnings outlook by third.

Ibiden Co. dropped 7% to 2,140 yen after the electronics and ceramics maker lowered its full year net profit outlook by half to 12.3 billion yen on the

Idemitsu Kosan Co declined 6.5% to 8.610 yen after the crude oil refiner estimated full-year net to decline 1.1% to 60 billion yen.

Kirin Holdings Co decreased 5% to 1,092 yen after its decision to acquire a controlling stake in the Brazil based Schincariol is expected to be challenged by the minority shareholder.

Kirin agreed to pay 198.8 billion yen or $2.63 billion for the beer and soft drinks maker, which many analysts deemed too expensive.

Namco Bandai Holdings Inc added 2.4% to 1,000 yen after the toymaker lifted its first half outlook more than 6.5 times to 32 billion yen and rising sales at theme parks and game parlors.

Renesas Electronics Corp decreased 6% to 620 yen after the first quarter net widened and sales declined 29% to 207 billion yen.

Toyota Motor declined 1.3% to 3,120 yen after the worries of strong yen dragged the automakers and exporters lower. U.S. vehicles sales in July declined 23% to 130,802 units.