Short Covering Rally Lifts Nikkei for the Second Day, Nomura Up 4%

Nigel Thomas
29 Jun, 2012
New York City

Japanese stocks extended gains for the second day as short sellers covered positions and international investors increased exposure to domestic stocks. Nikkei gained 1.5% on Friday but fell 10.7% in the quarter, worst since the third quarter of 2011.

[R]6:30 PM Tokyo – Japanese stocks extended gains for the second day as short sellers covered positions and international investors increased exposure to domestic stocks. Nikkei gained 1.5% on Friday but fell 10.7% in the quarter, worst since the third quarter of 2011.[/R]

The benchmark indexes in Tokyo jumped for the second day as short sellers led most of the activity in trading and European leaders agreed on specific measures to bolster banks and put in place more stimulus programs.

The benchmark Nikkei index increased to the highest since May 10 and delivered back to back gains of 1.5% for the second day. However, for the quarter the index fell 10.7% and closed up 6.5% in the year.

The Nikkei closed above 9,000 for the first time in seven weeks.

The Nikkei 225 Stock Average advanced 132.67 or 1.5% to 9,006.78 and the broader Topix index gained 11.27 or 1.5% to 770.08.

The yen edged higher to 79.51 against one dollar and fell to 100.007 against the euro.

European leaders agreed to offer direct lending to banks that will bypass the sovereign guarantee and relieve pressures on the bond market as long as the member nations meet the EU budgetary guidelines.

The decision announced by the European Council president Herman Van Rompuy after meeting of 17 euro zone nations that lasted into a late night session at least temporarily is expected to lower pressure on the Spanish and Italian bonds.

Stock Movers

Nomura Holdings increased 4% to 294 yen after the largest security house said it will cut pay of top executives and shut down for a week business operation to resolve expensive insider trading scandal and conduct an internal probe.

Nitori Holdings Co increased 1.9% to 7,540 yen, apparel retailer Shimamura increased 2.2% to 9,210 yen and Sagami Co declined 3 yen to 126 yen. Marushohotta Co was unchanged at 49 yen and Edion Corp edged down 0.2% to 399 yen.

Japan Tobacco dropped 1.3% to 2,361 yen after it ran up for two days in a row on the hopes that the company may pass on more price increase as the nation braces for higher sales tax.

Kajima Corp gained 2.6% to 233 yen and Taisei Corp rose 0.5% to 213 yen. Sekisui House Ltd increased 1.9% to 748 yen and Daito Trust Construction Co Ltd added 2% to 7,550 yen.

Sparx Group increased by its daily limit of 1,000 yen or 18% to 6,680 yen after it won a contract from the Tokyo government to start an infrastructure fund that will invest in alternative energy sources with a capital of 1.5 billion yen or $19 million.

Tokyo Tatemono Co., Ltd increased 5 yen to 297 yen and Mitsui Fudosan advanced 32 yen to 1,530 yen and Sumitomo Realty & Development Co. gained 53 yen to 1,941 yen.

Kansai Electric Power Company, Inc increased 20 yen to 955 yen and Tokyo Electric Power rose 1 yen to 154 yen.

Toyota Motor advanced 80 yen to 3,190 yen and Honda Motor Co. gained 86 yen to 2,749 yen and Nissan Motor Co Ltd added 14 yen to 748 yen.

Sony Corp increased 26 yen to close at 1,123 yen and Panasonic Corp closed up at 12 yen to 643 yen. Toshiba rose 5 yen to 300 yen.

Olympus Corp advanced 41 yen to 1,288 yen, Nikon gained 23 yen to 2,402 yen and Fanuc Ltd increased 190 yen to 12,950 yen. Canon Inc closed up at 55 yen to 3,165 yen.

Komatsu Ltd decreased 5 yen to 1,878 yen and Hitachi Construction Machinery Co increased 5 yen to 1,484 yen.

Inpex Corp gained 2.4% to 444,500 yen and Japan Petroleum Exploration Co. advanced 37 yen to 3,020 yen.

Mitsui O.S.K. Lines, Ltd increased 8 yen to 284 yen; Kawasaki Kisen Kaisha, Ltd added 1 yen to 156 yen and Nippon Yusen K.K. closed unchanged at 209 yen.

Fast Retailing Co. advanced 160 yen to 15,880 yen and J. Front Retailing Co. Ltd increased 8 yen to 399 yen.

Mitsubishi UFJ Financial Group gained 6 yen to 378 yen and Sumitomo Mitsui Financial Group advanced 24 yen to 2,612 yen. Nomura Holdings, Inc increased 11 yen to 294 yen.

Credit Saison Co Ltd closed up 32 yen to 1,757 yen.

Nippon Steel rose 2 yen to 179 yen and JFE Holdings Inc gained 13 yen to 1,318 yen.