Japan Higher on Upbeat Manufacturers

Ivaylo
02 Oct, 2006
New York City

The Bank of Japan tankan survey of business conditions stated Monday, although some economists expressed worries forward-looking sentiment estimates pointed to a nearing slowdown. The headline diffusion index for big manufacturers'''' sentiment came in at 24, higher than market expectations of 20 for the past three months. The tankan suggested the economy will be softening into next year, mainly because of the direction of the diffusion index into next quarter.

[R]7:30AM Asian markets rise on upbeat Japanese economic sentiment.[/R]
Asian markets were higher on Monday. The Nikkei 225 Average in Tokyo finished the day up 0.8% to 16,254.3, its highest close in nearly a month. After the release of the tankan, Honda Motor shares gained 2.5%. Shares of Fuji Photo Film advanced 2.8% but Sony Corp. shares fell 1.1% as a recall of laptop batteries made by one of the firm subsidiaries widened.

On Friday, Toshiba Corp. announced they were joining several other computer-makers in recalling lithium-ion batteries manufactured by Sony. Softbank Corp shares slipped 2% following Friday 7.2% gain. Mitsubishi Heavy Industries shares gained 2% after the company said it would sell compact nuclear reactors to U.S. utilities starting in 2011. Airline shares dropped as a recent recovery in crude-oil prices suggested that fuel costs may not retreat as much as expected. All Nippon Airways shares dipped 1.1%.

Australia S&P/ASX 200 added 0.5%. Woodside Petroleum was up 1.2% as crude-oil prices continued to recover. Miners gained in Australia, with BHP Billiton up 0.9% and Rio Tinto up 0.3%. The Taiex index in Taiwan rose 1.1%, while South Korea Kospi index gained 0.2%. Hong Kong and mainland China stock exchanges were closed Monday for National Day.

[R]6:30AM Merger hopes and commodities lift Europe on Monday.[/R]
European markets were higher by mid-morning on Monday. The FTSE 100 in London climbed 0.2% to 5,972.7, Frankfurt Xetra Dax added 0.3% to 6,021.65 and in Paris, the CAC 40 gained 0.2% to 5,261.69.

In focus

There was activity again in the utilities sector. EDP in Portugal gained 2.3% after reports in the Spanish press that it could form a friendly merger with Spain’s Gas Natural.

Advancers

RWE gained 1.8% , while Enel, which HSBC initiated at neutral, rose 0.2%. Ahold added 0.5% on reports its US Foodservice unit could be the target of private equity bids.

Decliners

Partygaming led the declines, falling 55.6%. Austria’s Bwin Interactive fell 17.3%. Telekom Austria fell 6.8% after investment bank UBS cut its rating on the company from buy to neutral and lowered its price target.

Oil and gold

Light, sweet crude for November delivery rose 12 cents to $63.03 a barrel in electronic trading on the NYME. November Brent crude on the ICE futures exchange in London rose 22 cents to $62.70 a barrel. Gold opened Monday at a bid price of $602.20 a troy ounce, up from $595.70 late Friday.

Currencies

The euro bought $1.2672 in morning European trading, compared with $1.2678 in New York late Friday. The British pound slid to $1.8689 from $1.8710. The dollar climbed Monday to 118.27 Japanese yen from 118.11 yen.

[R]5:30AM Gold and silver slipped on Friday on stronger dollar, technical factors.[/R]
December gold fell $6.70 to finish at $604.20 a troy ounce on the NYME. December silver gave up 19.5 cents to close at $11.54 an ounce. October platinum fell $4.80 to close at $1,141.20 an ounce. December palladium settled with a loss of $7.70, at $316.40 an ounce. In other metals trading, the December copper contract lost 3.25 cents to end at $3.4605 per pound.

The front-month November light, sweet crude oil contract rose 15 cents to close at $62.91 a barrel. October heating oil fell 2.92 cents to finish at $1.6846 a gallon. Front-month October unleaded gasoline rose 4.81 cents to $1.5492 a gallon. December natural gas futures settled 30.8 cents higher at $7.34 per million British thermal units. On the New York Board of Trade, Arabica coffee futures rose slightly in end-of-quarter activity. October raw sugar finished 0.30 cent higher at 10.85 cents a pound.