Tokyo Stocks Surge; Business Conditions Decline

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

Japan business conditions decline in the latest three months ending in December. The sharp decline in 34 years is likely to hit the hardest small and medium size businesses and exporters. However, yen rose against the dollar and stock indexes surged on the U.S. auto bailout prospects.

[R]5:00AM New York - Japan business conditions fall the most in 34 years. Automakers gain on U.S. auto bailout plan.[/R]

Japan stock indexes rose after speculation that the U.S. will bailout Detroit''s troubled carmakers led to rally in commodity stocks and shipping lines.

Gains were limited by the news that business conditions in Japan deteriorated the most since 1975.

In Tokyo trading Nikkei 225 index rose 5.2% or 428.79 to 8,664.66, and the broader Topix Index gained 4.1% or 33.56 to 846.93.

In the first section of the Tokyo Stock Exchange 18.6 billion shares worth 1.4 trillion yen were traded and in the second section 355 million shares valued at 3.3 billion yen changed hands.

Of the Nikkei 225 index stocks, 216 rose, 8 declined, and one was unchanged. Tosoh Corp. led gainers in the index shares with a rise of 15.3% followed by CSK Holdings gaining 12.3%.

Tankan Survey Drops to –24 in December Quarter

Bank of Japan reported today that the measure of business conditions for large- manufacturing companies fell to –24 from –3 in the three months to September, dropping the most since 1975.

Business conditions for medium-sized companies also plunged to –24 from –8 in the quarter to September.

Conditions for large non-manufacturing companies also deteriorated to –9 from 1 in the three months to September, while medium-sized companies in the sector slid –21 from –12.

Business conditions for all large-manufacturing companies fell to –16 in the review period from 0 in the previous month.

In addition, medium sized companies fell to –22 from –10.

U.S. Considers Tapping from $700 billion Fund to Help Automakers

U.S. administration is considering allocating Troubled Assets Relief Program funds to rescue the three troubled carmakers- General Motors, Chrysler LLC and Ford Motor Co.

The Senate Republicans last week blocked the passage of a $14 billion bill that was negotiated between White House and opposition Democrats.

Spokesman for the U.S. President George Bush Tony Fratto said administration officials were gathering financial information from the automakers and assessing data such as their cash position.

“We''ll be focused on trying to get the policy right while considering the best interests of the taxpayer and our economy, and we''ll take the time we have available to do that right,” said Fratto.

Yen Rises

The yen rose 1.1% to 90.65 against the dollar from 90.68.

Gainers & Losers

Tosoh Corp. led advancers in the Nikkei 225 index shares with a rise of 15.3% followed by increases in CSK Holdings of 12.3%, in Suzuki Motor of 11.6%, in Taiheiyo Cement of 11.3% and Isuzu Motors of 11.2%.

Suzuki Motors and other carmakers increased on rising expectations that the U.S. will rescue General Motors, Chrysler LLC and Ford Motors.

Shipping lines also gain on speculation that the U.S. auto bailout will trigger demand for raw materials will rise. Mitsui OSK Lines soared 10.2% and Kawasaki Kisen edged up 9.8%.

Commodity stocks rose as well. Nippon Mining House soared 9.8% and Toho Zinc gained 9.1%.

Tokyo Gas Co. led decliners in the Nikkei 225 index shares with a drop of 1.3% followed by losses in Inpex Holdings of 1.2%, in Tokyo Electric Power of 1.2%, in Osaka Gas Co. Ltd of 1% and Nippon Paper Group of 0.8%.