Nikkei closes at fresh 5-month low, yen's rise thwarts exporters

20:19, May 24, 2010      

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Japan's Nikkei stock index extended losses Monday as investors remained cautious about picking up riskier assets amid ongoing concerns about the eurozone's fiscal health and the yen's appreciation dissuaded buying of export- related issues.

The 225-issue Nikkei Stock Average edged down to a fresh five- month closing low, losing 26.14 points, or 0.27 percent, from Friday to 9,758.40.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange was up 0.32 point, or 0.04 percent, to 880.01.

Brokers said that while Tokyo stocks were, for the majority of both sessions, trading in negative territory, earlier losses were trimmed as investor sentiment was lifted by a firm performance of other Asian markets, particularly the Shanghai Stock Exchange, which gained more than 3 percent.

"The eurozone problems haven't been cleaned up yet and even though the global economy is definitely showing more signs of recovery than it did six months ago, worry continues that the eurozone's woes will put a brake on this growth," said one Tokyo- based market strategist.

"As Chinese stocks rose, stocks in Japan pared losses into the afternoon, but there is still wariness in the market about a stronger yen," said another market analyst.

Market players also pointed towards an economic "double edged sword" as European countries' efforts to reign-in spending to address national debt may cause the global economy to stagnate and as the credibility of the euro continues to decline the yen is always first choice as a currency safe haven, pushing up its value and hurting Japanese firms reliant on overseas profits.

Germany's move to impose a ban on naked short-selling in financial institutions continues to add to a host of factors contributing to uncertainty in the eurozone, analysts added.

The euro traded at around the 112 yen line before recovering some of its lost ground to trade in the upper 112 yen zone on Monday.

As the Shanghai Composite Index advanced as much as 3.7 percent, China-related issues rose with construction machinery maker Komatsu Ltd. climbing 2.2 percent to 1,671 yen and industrial farm equipment maker Kubota Corp. advancing nearly 1 percent to 720 yen.

Meanwhile, Sumitomo Heavy Industries Ltd. rose 1.6 percent to 517 yen.

Despite the yen falling back against the dollar in late trade and the euro attempting to make a come back, the single European currency still ended down 0.3 percent against the yen and thus exporters, particularly those with a heavy presence in Europe, lost ground.

Canon Inc., the world's largest maker of digital cameras, shed 0.4 percent to 3,710 yen and Advantest Corp., maker of chip testers, fell 1.1 per cent to 2,045 yen.

Kyocera Corp. closed at 8,060 yen having lost half a percent.

Japanese shipping lines advanced however following the Baltic Dry Index of shipping rates for commodities' recent climb and Nomura lifted its rating on Japan's three top firms to "buy" from "neutral."

Subsequently, Kawasaki Kisen K.K. gained 3.9 percent to 343 yen, while Mitsui O.S.K. Lines Ltd. added 2.6 percent to 624 yen. Nippon Yusen K.K., Japan's largest shipping line by sales, rose 0. 9 percent to 327 yen.

It was also a good day for Japan's megabanks, with Mizuho Financial Group Inc. climbing 3.1 per cent to 165 yen and Sumitomo Mitsui Financial Group Inc. adding 1.1 per cent to 2,729 yen.

Bucking the upward trend among financials, however, Japan's top- lender Mitsubishi UFJ Financial Group Inc., shed 0.2 per cent to 443 yen.

Some 2.2 billion shares changed hands on the Tokyo exchange's First section, down from Friday's volume of 2.6 billion shares.

Advancing issues outnumbered declining ones by 781 to 758.

Source: Xinhua


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