Nikkei closes down, breaking 4-day winning streak

10:09, November 13, 2009      

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Japan's 225-issue Nikkei Stock Average fell 0.7 percent Thursday as losses by shipping line Nippon Yusen K.K. following share issuance plans, sparked concerns in the industry. Ebara Corp. and Takeda Pharmaceutical Co. were also significant drags on markets of which the key Nikkei benchmark closed down 67.19 points from Wednesday to 9,804.49.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange was down 4.59 points to 867.70.

Nippon Yusen K.K. Japan's biggest shipping line plans to raise 142.5 billion yen (U.S. 1.6 billion dollars) to help pay for new vessels by offering as many as 460 million new shares, it said in a statement Thursday.

Nippon Yusen's sale would be the largest offering of new shares by a shipping line since China Shipping Container Lines Co. raised U.S. 2.1 billion dollars selling shares in Shanghai in December 2007.

Thursday's announcement has caused industry-wide concerns that other shipping firms will follow suit.

"There is a concern whether the company will be able to improve efficiency with more ships. It seems like there is an excess capacity of vessels in the shipping industry," said Satoshi Yuuzaki, an analyst at Takagi Securities Co.

Nippon Yusen K.K. slumped 4 percent to 314 yen, with overall losses in the region of 42 percent for the year. Japanese shipping counterpart Kawasaki Kisen K.K. also ended in negative territory plunging 6.1 percent to 310 yen.

Ebara Corp, maker of environmental and industrial machinery, plummeted 9.41 percent, the biggest loss on the Nikkei Thursday, to close at 366 yen. Alps Electric Co. Ltd. also saw heavy loses Thursday, relinquishing 9.3 percent to 517 yen, after the maker of electronics for cars forecast worse-than-expected annual losses.

Japan's pharmaceutical industry also dragged on markets today with Takeda Pharmaceutical Co dropping 1.4 percent to 3,530 yen after reports said a government advisory committee had recommended cutting drug costs to trim medical expenses. Daiichi Sankyo Co. Ltd. also ended in negative territory, down 1.63 percent to 1690 yen.

FamilyMart Co., Japan's third-largest convenience store operator, rose 1.6 percent following claims the company was in talks to buy smaller rival am/pm Japan Co. Reports have stated that FamilyMart Co. and Itochu Corp. may spend as much as 10 billion yen (U.S. 111 million dollars) to acquire all shares from am/pm's parent company Rex Holdings Co.

Carmakers rose after Goldman Sachs raised ratings on Fuji Heavy Industries, maker of Subaru cars, to "buy" from "neutral" and added that Honda Motor Co. was also rated at "buy".

Honda Motor Co. saw gains of 1.75 percent to close at 2,905 yen, whilst Toyota Motor Corp. rose 2.62 percent to close at 3,520 yen. Nissan Motor Co. was also up, closing the day with advances of 1.38 percent to 662 yen.

In diversified financial sectors Sumitomo Mitsui Financial Group Inc. crept up 0.62 percent to 3,220 yen, whilst Mitsubishi UFJ Financial Group Inc. gained 0.39 percent to 512 yen.

"While investor risk tolerance seems healthy around the world, Tokyo shares have failed to capitalize on that, possibly due to factors such as policy uncertainty including concerns about the government's fiscal policy. Investors seem to be bypassing Japanese shares and moves in Japanese shares are now dominated by investors trading based on factors specific to individual shares," said Nagayuki Yamagishi, an investment strategist at Mitsubishi UFJ Securities.

Trade was moderate Thursday, with 1.8 billion shares changing hands on the Tokyo exchange's First section, comparative to last week's daily average.

Declining shares outnumbered advancing ones by nearly 5 to 1.

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