Nikkei Plunges on Bank Stock Sell-Off

Ivaylo
25 May, 2006
New York City

Deaths, connected with the sudden outburst of bird flu in Indonesia ground down market confidence. In afternoon trading, the Nikkei 225 Average dropped 1.5%, led down by financials and export stocks in spite of dollar strength versus the yen. Shares across the region also fell. Australia, Shanghai, South Korea and Singapore declined considerably. Taipei fell slightly. Malaysia slid into the red after modest gains in early session.

[R]7:30AM Japanese benchmark Nikkei falls, followed by most Asian markets.[/R]
Asian markets finished lower. Japan’s benchmark Nikkei 225 Average was down 213 points, or 1.34% to close at 15693.75. The Nikkei declined on weakness in banking shares. Mitsubishi UFJ, the world-largest bank in terms of assets, fell 3.5%. Another major, Sumitomo Mitsui Financial Group shed 1.7%. Auto makers also declined as Toyota was down 1.6%, while Honda Motor Co lost 1.7%. Hong Kong''s Hang Seng Index dropped 0.9% to 15,675.36. The China Enterprise Index, a yardstick of China stocks listed on the Hong Kong Stock Exchange, shed 2.8% to 6,556.78. South Korean benchmark Kospi was the lead declining market, shedding 2.82% to 1295.76. Singapore''s Straits Times Index dropped 1.5%, while the Shanghai Composite Index declined 1.3%. Markets in Indonesia were not opened today for a public holiday.

[R]6:30AM European shares plunge after initial gains.[/R]
On the corporate front Euronext stocks were down 4.5%, following the announcement of Atticus, which has 9% of the operator, to leave with the management to decide which the best offer was. That impacted negatively hopes of a higher bid placed by Atticus. Deutsche Börse was down 4.4%, after it said that it would improve its offer but would not overpay. Danone advanced 2.2%, on the brokerage front, after Merill Lynch added the company to its Europe 1 Focus List on valuation basis. ProSiebenSat.1 advanced 2.6% after Deutsche Bank raised the broadcaster’s level from “hold” to “buy”.

Crude oil dipped 20 cents to settle at $70.06 a barrel by 0535 GMT, after shedding $1.90 or 2.7 % on Wednesday. London Brent crude advanced 13 cents to $69.35. Gold gained on Thursday after plunging in U.S. trade, with bargain-hunters and physical buyers slowly moving into the market on dollar frailty. Spot gold advanced to $647.30 an ounce before slipping to $644.90/645.70 by 0933 GMT, against $639.20/640.00 late in New York on Wednesday. The dollar rose against the euro. The euro bought $1.2761 in morning European trading, down from $1.2773 in New York late Wednesday. The British pound fell to $1.8687 from $1.8717. The dollar was virtually unchanged against the Japanese currency, edging up to 112.71 yen from 112.69 yen.

[R]5:00AM Gold and silver drop again on profit taking and stronger dollar.[/R]
June gold dropped $36.20 to close at $637.50 an ounce. July silver shed 65.5 cents to finish at $12.515 an ounce. July copper lost 24.65 cents to settle at $3.64 per pound. July crude oil declined $1.90 to finish at $69.86 a barrel. June gasoline fell 9.33 cents to close at $2.1567 a gallon. July Arabica coffee futures finished 1.6 cents lower at 99.8 cents a pound. Raw sugar in foreign ports futures for July closed down 0.41 cent at 16.21 cents a pound while October shed 0.44 cent to 16.44 cents a pound.