Tokyo Stocks Plunge 5.6%

123jump.com Staff
12 Dec, 2008
New York City

Stocks in Tokyo plunged after the U.S. auto bailout discussions failed to produce a consensus among the U.S. Senate Republicans. Stocks plunged 5.6% but for the week rose 4%. Japanese automakers dropped sharply on the worries that U.S. auto parts makers that supply to Japanese companies may suffer.

[R]5:00AM New York, 7:00PM Tokyo - Japan to increase stimulus package to 40 trillion yen.[/R]

Japan market averages fell sharply led by carmakers after bipartisan talks on a $14 billion bailout package for the U.S. automakers collapsed yesterday.

In Tokyo trading Nikkei 225 fell 5.6% or 484.68 to 8,235.87, rising 4% for the week, and the broader Topix Index dropped 4.2% or 35.88 to 813.37, shedding 3.5% for the week.

In the first section of the Tokyo Stock Exchange 15.1 billion shares worth 1.2 trillion yen were traded and in the second section 227 million shares valued at 1.6 billion yen changed hands.

Of the Nikkei 225 index stocks 41 rose, 149 declined, and 10 were unchanged. Nippon Mining House led advancers in the index shares with a rise of 3.3% after gold and oil prices advanced.

Japan to Increase Stimulus Package to 40 trillion yen

Yomiuri Shimbun reported today that the government will increase its stimulus package to trillion yen noting that Prime Minister Taro Aso will announce the increase today.

The package includes tax cuts, benefits to households and small businesses and measures to help people who lose their jobs.

Government plans to facilitate bank loans to smaller companies through injecting capital into troubled banks. Banks will able to receive up to two trillion yen in public funds to boost their balance sheets.

The report notes that the government may increase the loan amount six-fold to 12 trillion yen.

Japan''s electricity Generation Declines 1.8% in November

Bloomberg News reported today that the Federation of Electric Power Companies said electricity generation from the country''s regional power utilities fell 1.8% to 77.17 billion kilowatt-hours of electricity in November from drop of 0.9% in October.
Chubu Electric Power cut lowered production 5.1% during the period on falling demand and a deepening recession.

Federation of Electric Power Companies will announce data of sales for each industry on December 17.

U.S. $14 billion Bailout Fails in Senate

Associated Press reported today that bipartisan talks on a $14 billion bailout failed after the Senate Republicans insisted that the Unites Auto Workers union agree on marked wage cuts in 2009 that will bring them in line with those paid to Japanese carmakers. UAW is willing to make wage cuts in 2011.

Talks centered on wage and benefit concessions from the UAW and on debt-restructuring by General Motors Corp., Ford Motor Co. and Chrysler LLC.

Senate Majority Leader Harry Reid said he hoped President George W. Bush will tap from the $700 billion Wall Street bailout fund for emergency aid to the ailing carmakers.

Gainers & Losers

Nippon Mining House led advancers in the index shares with a rise of 3.3% followed by increases in Inpex Holdings of 2.8%, in Nippon Paper Group of 2.3%, in Pac Metals of 2.1%, and Softbank Corp. of 1.7%.

Nippon Mining House and other commodity stocks rose after gold prices soared $17.80 to $826.6 per ounce, while crude oil prices advanced $4.46 to $48 per barrel.

Nippon Oil increased 1.3% as well.

Tokyo Dome Corp. led decliners in the Nikkei 225 index shares with a fall of 14.4% followed by losses in Honda Motor Corp. of 12.5%, in Isuzu Motors of 12.3%, in Denso Corp. of 12.1%, and T&D Holdings of 12.1%.

Realty stocks also fell. Sumitomo Realty shed 11.9%, Hino Motors shed 11.1%, and Mazda Motor Corp. plunged 10.9%.