Nikkei in Japan Halts 3-day Rally; Pioneer Soars 7%

Nigel Thomas
30 Nov, 2011
New York City

The Nikkei index in Tokyo halted a rally of three days as Japanese banks were included in the latest worldwide downgrade of banks. Shipping companies continued to slide and steelmakers were for the second week in a row. Pioneer Corp surged 7% on the hopes of earnings recovery.

[R]7:00 PM Tokyo – The Nikkei index in Tokyo halted a rally of three days as Japanese banks were included in the latest worldwide downgrade of banks. Shipping companies continued to slide and steelmakers were for the second week in a row. Pioneer Corp surged 7% on the hopes of earnings recovery.[/R]

Stocks in Japan edged lower for the first time four days after banks suffered a downgrade and European leaders struggled to arrange financing to support sovereign bond market.

Euro-zone finance ministers have agreed to leverage the capacity of the European Financial Stability Facility by introducing sovereign bond partial risk participation and seek help of the IMF and the ECB, the fund said in a statement on Tuesday.

However, the talks on Tuesday failed to increase the EFSF from €440 billion.

""We agreed to rapidly explore an increase of the resources of the IMF through bilateral loans,"" Jean-Claude Juncker, head of the region''s finance ministers said, adding that the goal would be to allow the IMF to match the funds of the EFSF.

The meeting also decided to release the sixth loan installment to Greece worth €8 billion from the first €110 billion bailout package.

The ministers endorsed the payout after receiving a written commitment from Athens that it will fully adhere to the deficit cut plan.

Standard & Poor''s lowered its credit ratings on 15 financial institutions, mostly in Europe and the U.S.

The downgraded banks include among others Bank of America, Goldman Sachs, Citigroup, JPMorgan Chase., Barclays, HSBC Holdings Plc, Royal Bank of Scotland and UBS. The ratings were lowered by one notch.

S&P also lowered its ratings outlook for Sumitomo Mitsui Group and Mizuho Financial Group to “negative” from “stable.” Stocks of banks fell at least 1%.

The late downgrade of banks by a rating agency was yet another indication of how lax and slow the agencies are in catching up with market realities.

Investors are increasingly concerned about the usefulness of the ratings and many are demanding the withdrawal of the licenses of these companies to issue ratings.

The Nikkei 225 Stock Average decreased 0.5% to 8,434.61 and the broader Topix index declined 0.2% to 728.46.

The yen at close in Tokyo trading rose 0.2% to 77.88 per U.S. dollar.

Trading volume increased to 1.76 billion from 1.57 billion shares on Tuesday and 833 shares declined and 689 shares rose.

Stock Movers

Toyota Motor decreased 20 yen to 2,509 yen and Honda Motor Co. rose 6 yen to 2,389 yen and Nissan Motor Co Ltd declined 3 yen to 690 yen.

Sony Corp decreased 20 yen to 1,372 yen, Panasonic Corp closed up 1 yen at 727 yen and Canon Inc rose 5 yen at to 3,420 yen.

Nintendo Co. Ltd declined 200 yen or 1.7% to 11,600 yen.

Olympus Corp increased 22 yen or 2.2% to 1,025 yen after the company said it is preparing to release its revised financial statement by December 14.

Fanuc Ltd decreased 320 yen to 12,270 yen and Kyocera closed down 110 yen at 6,760 yen. Nikon Corp declined 17 yen to 1,771 yen.

Elpida Memory Inc fell 5.6% or 22 yen to 368 yen and Ulvac Inc closed unchanged at 1,027 yen.

Pioneer Corp surged 6.7% or 23 yen to 368 yen on the hopes that earnings will recover faster after production resumed from the flood affected areas in Thailand.

Shipping companies declined on the growing worries that rising supply of new ships from China and South Korea will depress the freight rates further.

Mitsui O.S.K. Lines, Ltd dropped 9 yen to 239 yen, Kawasaki Kisen Kaisha, Ltd decreased 8 yen to 130 yen and Nippon Yusen K.K. fell 8 yen at 169 yen.

Dai-ichi Life decreased 1,200 yen to 83,200 yen.

Ms&Ad Insurance Group Holdings, Inc fell 8 yen to 1,486 yen and NKSJ Holdings Inc rose 22 yen to 1,504 yen.

Mitsubishi UFJ Financial Group fell 3 yen at 328 yen and Sumitomo Mitsui Financial Group decreased 22 yen to 2,089 yen.

Komatsu Ltd decreased 36 yen to 1,895 yen and Hitachi Construction Machinery Co decreased 27 yen to 1,326 yen.

Kanamoto soared 6.2% to 494 yen after construction machinery lessor lifted its operating outlook for the year ending in October.

KDDI Corp extended losses for the second day by 1.6% to 505,000 yen after the company said yesterday it will issue 200 billion yen of convertible bonds to buy back its own shares from Tokyo Electric Power Co.

Nippon Electric Glass dropped 4.4% or 35 yen to 770 yen and Asahi Glass Company, Limited fell 2.7% or 18 yen to 644 yen.

Japan Communications jumped 15% to 8,700 yen on a report published by the Nikkei business daily that the company is looking to enter into a joint venture with Marubeni to offer a low cost wireless data service to businesses.

Tokyo Electric Power Co. increased 1.4% to 284 yen after the Nikkei newspaper said it is looking to add 12 banks to its list of lenders.