U.S. Stocks Drag Tokyo Down

Ivaylo
31 May, 2006
New York City

The steep fall of U.S. stocks overnight, together with the rise in oil prices, pulled Japan

[R]7:30AM Tokyo benchmark down on U.S. stocks and oil.[/R]
Asian markets finished lower. The Nikkei index shed 392.12 points, or 2.5%, to 15467.33, reaching its lowest close since Feb. 20. Among the decliners were Canon, dropping 4.2%, Nikko Cordial losing 2.39%. Real estate companies also declined, with Sumitomo Realty & Development down 2.9%. Steelmakers JFE Holdings reported 1% decline. Auto and bank stocks took no exception, as Honda Motor dropped 2.5% and Mizuho Financial Group lost 1.5%. Australian benchmark S&P/ASX 200 index plunged 103.7 points, or 2%, to finish at 5001.7 points on the day''s low. BHP Billiton lost 3.8% and Rio Tinto was down also 3.8%. Singapore''s Straits Times Index fell 2.3% in afternoon trade, to close at 2383.87 points.

[R]6:30AM Oil, banks and telecoms help Europe reverse into profit.[/R]
European markets rose by mid morning. London’s FTSE 100 recouped 0.5% to 5,679.5 , Frankfurt’s Xetra Dax edged up 0.2% to 5,633.39 and the CAC 40 in Paris added 0.1% to 4,896.27. On the corporate front, the telecom sector performed robustly. France Telecom rose 2.3% and Dutch operator KPN advanced 1.6%. Telecom Italia gained 1.6% while Spain’s Telefonica climbed 1.5%. Steel shares remained closely watched, as Corus, the Anglo-Dutch group, posted quarterly earnings below a year-ago level. The company announced that good results will be seen in the next six months. In other news from the sector, the much-talked-about merger of Arcelor with Severstal prompted investors into considering legal action to make Severstal launch a full bid for Arcelor.

Crude oil for July delivery slipped 4 cents to $71.99 a barrel by 0710 GMT, a day after prices advanced 66 cents to their highest close in two-and-a-half weeks on oil demand from China. Brent crude remained unchanged at $71.05 a barrel.The euro gained against the dollar. In morning European trading the euro bought $1.2873, up from $1.2865 the evening before in New York. The dollar slipped to purchase 111.97 Japanese yen from 112.17 the day before, while the British pound advanced slightly to $1.8837 from $1.8829 in New York.

[R]5:00AM Gold and silver advanced due to weak dollar.[/R]
August gold finished $3.10 higher at $660.50 an ounce on NYME. Earlier in the trading the contract reached $671.50 an ounce. July silver closed 34 cents higher at $13.07 an ounce after hitting a session high of $13.36 an ounce. July platinum settled down $6.70 at $1,291.40 an ounce, while September palladium ended up $2.10 at $362.65 an ounce. The most-traded July copper contract dropped 14.10 cents to $3.6740 per pound.

July crude oil contract finished 66 cents higher at $72.03 a barrel, after advancing to $72.75 a barrel. June gasoline put up 1.31 cent to $2.1499 a gallon, off its prior high of $2.19 a gallon. On the New York Board of Trade, July Arabica coffee finished 0.65 cent up at 98.75 cents a pound. July futures for raw sugar in foreign ports added 0.03 cent higher at 15.91 cents a pound.