Nikkei Extends Gains in 3-Day Rally

Nigel Thomas
07 Jun, 2012
New York City

Nikkei index in Japan gained for the third day in a row and traders prepared to square stock options tomorrow. Talks of direct lending to Spanish bank for the European leaders lifted market sentiment.

[R]8:00 PM Tokyo – Nikkei index in Japan gained for the third day in a row and traders prepared to square stock options tomorrow. Talks of direct lending to Spanish bank for the European leaders lifted market sentiment.[/R]

Stocks in Tokyo trading gained for the third day on Thursday after European leaders showed willingness to offer direct bailout to banks in Spain.

In addition, market sentiment was supported by the latest monetary easing in China. People’s Bank of China cut one year borrowing rate 25 basis points to 6.31% and one year deposit rate to 3.25%.

The PBOC also allowed banks to set its deposit and lending rate with a greater flexibility from June 8. The new relaxed guideline allows banks to offer new loans at as low as 80% of reference rate and rates on deposits as high as 110% of the benchmark rate.

The benchmark Nikkei jumped 2.4% in the week so far and is set to break the nine week of losses as trading rebounded on short covering.

The Nikkei 225 Stock Average rally on second day ganing of 106.19 or 1.2% to 8,639.72 and fell to the six month low and the broader Topix index increased 12.19 or 1.7% to 730.75.

In trading, 1.75 billion shares changed hands as short covering drove the rally and the market indexes are expected to open higher on Friday as several stock options expire.

Stock Movers

Securities, banks and insurance companies led the market advance with a rise of 4%. Exporters also gained on the hopes of better economic conditions in the euro zone.

Kansai Electric Power Company, Inc fell 2 yen to 1,057 yen and Tokyo Electric Power rose 1 yen to 161 yen.

Chubu Electric Power rose 0.7%, Shikoku Electric Power Co added 1.5% and Hokkaido Electric Power gained by 1.5%.

Toyota Motor advanced 61 yen to 3,060 yen and Honda Motor Co. gained 52 yen to 2,537 yen and Nissan Motor Co Ltd increased 23 yen to 764 yen.

Sony Corp gained 21 yen to close at 1,072 yen and rebounded for the second day from the 32-year low and Panasonic Corp closed up at 22 yen to 550 yen. Toshiba added 7 yen to 298 yen.

Panasonic is likely to make $630 million investment in the scandal plagued Olympus and become its largest stockholder according to local media reports.

Olympus Corp increased 8 yen to 1,346 yen, Nikon closed up at 71 yen to 2,256 yen and Fanuc Ltd advanced 320 yen to 13,730 yen. Hitachi Ltd gained 9 yen to 459 yen.

Canon Inc advanced 105 yen to 3,185 yen and said in a statement that it will spend as much as 50 billion yen to buy back up to 1.4% of its shares before the end of July.

Komatsu Ltd added 39 yen to 1,884 yen, Hitachi Construction Machinery Co increased 23 yen to 1,462 yen.

Inpex Corp gained 3.3% to 454,000 yen and Japan Petroleum Exploration Co. advanced 55 yen to 3,075 yen.

Mitsui O.S.K. Lines, Ltd added 6 yen to 273 yen; Kawasaki Kisen Kaisha, Ltd rose 2 yen to 143 yen and Nippon Yusen K.K. up 5 yen to 208 yen.

Nippon Sheet Glass Co Ltd rose 3 yen to 84 yen after the Nikkei business daily reported that the company has no plans to raise capital and may slow production at some of its plants.

Asahi Glass Co Ltd gained 9 yen to 541 yen.

Fast Retailing Co. declined 330 yen to 16,030 yen and J. Front Retailing Co. Ltd added 4 yen to 378 yen.

Mitsubishi UFJ Financial Group increased 10 yen to 355 yen and Sumitomo Mitsui Financial Group advanced 58 yen to 2,402 yen. Nomura Holdings, Inc closed up at 10 yen to 274 yen.

Credit Saison Co Ltd gained 15 yen to 1,572 yen.

Tokyo Tatemono Co., Ltd increased 8 yen to 273 yen and Mitsui Fudosan added 18 yen to 1,383 yen and Sumitomo Realty & Development Co. gained 26 yen to 1,679 yen.

Nippon Steel rose 3 yen to 173 yen and JFE Holdings Inc closed up at 31 yen to 1,289 yen.