Bargain Hunting Lifts Nikkei to 1.7% Fall; Tepco Loss

Nigel Thomas
09 Aug, 2011
New York City

Stocks in Japan plunged for the third day and extended three day losses to 7.4%. The Nikkei index plunged as much as 4.8% in the morning trading but managed to rebound at close down 1.7%. The broader Topix wiped out all the gains since the rebound after the triple disaster in March.

[R]4:30 PM Tokyo – Stocks in Japan plunged for the third day and extended three day losses to 7.4%. The Nikkei index plunged as much as 4.8% in the morning trading but managed to rebound at close down 1.7%. The broader Topix wiped out all the gains since the rebound after the triple disaster in March. Tepco set aside 500 billion yen to cover disaster related charges.[/R]

The Nikkei index in Tokyo trading dropped sharply following a weak response in the New York markets. The index plunged at the opening to as low as 4.8% and recovered near the close after China reported inflation data and bargain hunting brought buyers.

Tokyo stocks extended losses for the third day in a row and the benchmark index flirted with the 8,600 lows last seen on March 15.

Indexes in Japan and Asia declined after late Friday Standard & Poor’s cut rating on the U.S. debt from its highest AAA rating to AA+. The other two agencies left the rating unchanged on August 2 after the U.S. lawmakers struck a debt and spending agreement.

The Nikkei index extended its losses by 1.7% in a 3-day sell-off to 7.4% and the benchmark index is down 13% in the year. The Topix fell for the sixth day in a row and wiped out all the gains since March 15.

The yen rose as high as 77.86 from 78.42 in volatile trading and traded against one euro at 110.21 from 111.34 at yesterday’s close.

The Nikkei 225 Stock Average fell 1.7% or 153.08 to 8944.48 and the broader Topix index fell 12.47 or 1.6% to 770.39. The Nikkei declined 7.4% in the three day of losses.

The Nikkei is down 18.5% from its peak on February 21 and dropped 11% in the year but still above its March 15 low of 8,605.15.

Trading volume soared to 3.3 billion stocks above the last week average of 2 billion shares and was the highest since March 23.

Stock Movers

Financials declined for the third day in a row on the twin worries of the U.S. debt downgrade and the persistent problems in the euro-zone.

Mitsubishi UFJ Financial Group Inc dropped 2.4% to 363 yen and Sumitomo Mitsui Financial decreased 2.2% to 2,260 yen. Nomura Holdings declined 3.8% to 327 yen.

Toyota Motor fell 1.9% to 2,937 yen and Sony Corp declined 1.1% to and Seven % I fell 3.5% to 1,992 yen.

Energy linked companies fell after oil dropped 4.5% and traded below $80 a barrel. The sharp reversal in oil in the last two weeks knocked off 20% and traded at its low in a year.

Inpex Corp fell 5.5% to 497,000 yen and Mitsui OSK Lines fell 6% to 355 yen. JX Holdings dropped as low as 7.5% to 467 yen and Japan Petroleum Exploration Co. fell 3.3% to 3,360 yen.

Mitusi & Company fell 2.7% to 1,313 yen and Itochu Corp dropped 27 yen to 827 yen. Marubeni Corp fell 22 yen to 507 yen.

Elpida Memory dropped 9.2% to 573 yen after it reported weak first quarter earnings and issued a bleak outlook. The earnings declined at the third largest DRAM memory module maker on stronger yen and sliding chip prices.

Tepco plunged as much as 14% and closed flat at 389 yen after it reported a net loss of 571.76 billion yen. The company said the extraordinary losses of 500 billion yen will the cover the compensation for the victims of nuclear power plant disaster.