Japan's Bonds Gain as Stocks Slump, Demand Rises at Auction - BusinessWeek

October 04, 2011, 3:13 AM EDT By Mariko Ishikawa

Oct. 4 (Bloomberg) -- Japan’s bonds rose, driving down 30- year yields for the first time in seven days, as stocks fell, boosting demand for the relative safety of government debt.

Benchmark 10-year yields dropped from near a one-month high on concern Greece will default and Europe’s debt crisis will worsen. Bonds also advanced after today’s auction of 10-year debt drew the highest demand in three months and as Goldman Sachs Group Inc. cut its forecasts for Japan’s economic growth and yields for the securities.

“The bond market is reflecting risk aversion,” said Toru Suehiro, a market analyst in Tokyo at Mizuho Securities Co., one of the 25 primary dealers obliged to bid at government debt sales. “Because there isn’t a fundamental resolution to the European problem, we may see a cycle of optimism and pessimism continue which will disappoint investors. I think pessimism will prevail in the end.”

Thirty-year yields fell 1.5 basis points to 1.905 percent at 3:26 p.m. in Tokyo at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The 2 percent securities maturing in September 2041 rose 0.29 yen to 101.811 yen. Benchmark 10-year rates fell 2.5 basis points to 0.99 percent after touching 1.025 percent on Sept. 30, a four-week high.

Ten-year bond futures for December delivery advanced 0.27 to 142.54 at the 3 p.m. close of the Tokyo Stock Exchange. The Nikkei 225 Stock Average sank 1.1 percent.

Today’s sale of 10-year bonds drew bids valued at 6.3 trillion yen ($82.2 billion), or 3.15 times the amount sold. That was the highest ratio since July even after the coupon was set at 1 percent, the least since November 2010.

‘Slightly Stronger’

“The results for the 10-year auction were slightly stronger than expected,” said Reiko Tokukatsu, a senior fixed- income strategist at Barclays Capital Japan Ltd. “Bonds tend to find more buyers on dips because sentiment in financial markets has deteriorated” amid the worsening situation in Greece.

Goldman Sachs halved its forecast for Japan’s growth to 0.1 percent during the fiscal year ending March 2012 owing to a slowdown in the global economy. The company also cut its forecast for Japan’s 10-year yields to 1.1 percent in three months from 1.25 percent.

European finance ministers meeting in Luxembourg pushed back a decision on the release of Greece’s next loan installment until after Oct. 13. It was the second postponement of a decision originally slated for this meeting.

--With reporting by Masaki Kondo in Tokyo. Editors: Nate Hosoda, Rocky Swift

To contact the reporter on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.

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Japan Stocks Drop as Europe Impasse Weighs on Banks, Exporters - BusinessWeek

Oct. 4 (Bloomberg) -- Japanese stocks fell, with the Nikkei 225 Stock Average dropping to its lowest level in a week, as discord among European policy makers fueled concern the region will fail to resolve its debt crisis, stalling global growth.

Mitsubishi UFJ Financial Group Inc., Japan's largest lender by market value, fell 3.8 percent, its steepest drop in over six months after financial shares plunged in New York. Mitsubishi Corp., Japan's biggest trading company, dropped 5.7 percent on lower commodity prices. Kawasaki Kisen Kaisha Ltd. tumbled 4.5 percent after the shipping line said it expects a loss because of slumping cargo rates.

The Nikkei 225 fell 1.1 percent to 8,456.12 at the 3 p.m. close of trading in Tokyo, its lowest close since Sept. 26. The measure tumbled 11 percent last quarter, its worst performance since the three months ended June 2010. The Topix lost 1.5 percent to 736.18 today, with about four shares falling for each that gained.

“If we don't get a resolution in Greece, we may see a disorderly default,” said Koichi Kurose, chief economist in Tokyo at Resona Bank Ltd. which oversees the equivalent of $68 billion in assets. “The politicians are all over the place. Stocks are pricing in a scenario where the financial crisis spreads in Europe, the U.S. economy worsens and it leads to a deterioration in the global economy.”

The Standard & Poor's 500 Index fell 2.9 percent yesterday, dropping to a one-year low, led by financial shares amid concern that Europe's debt crisis will spill over into the banking system. Futures on the S&P 500 climbed 0.6 percent today.

Greek Crisis

German Finance Minister Wolfgang Schaeuble yesterday opposed moves to further increase the scale of a euro-area rescue fund until three countries approve a previous upgrade. Slovakia, the Netherlands and Malta have yet to ratify an earlier decision to expand the European Financial Stability Facility to 440 billion euros ($584 billion).

Europe's financial leaders are fighting on multiple fronts, trying to extinguish the Greek crisis while insulating Italy and Spain and shoring up banks that the International Monetary Fund says face as much as 300 billion euros in credit risk.

Japanese lenders dropped. Mitsubishi UFJ Financial dropped 3.8 percent to 331 yen, its steepest decline since March 29. Sumitomo Mitsui Financial Group Inc., the country's second- largest bank by market value, dropped 1.5 percent to 2,114 yen.

Slower Global Growth

“The main thing that's driving down the market is Europe,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “There's this worry that Europe is going to implode and drag down the U.S. with it. It's not good for Asia.”

Goldman Sachs Group Inc. lowered its forecast for world growth to 3.5 percent next year from a previous outlook of 4.3 percent, citing Europe's deterioration. The U.S. also faces a 40 percent chance of a recession, the investment bank said.

More than $10 trillion was wiped from global equity markets last quarter. Benchmark measures for 36 out of 45 nations in the MSCI All-Country World Index posted declines of 20 percent or more from their peaks, meeting the common definition of a bear market, according to data compiled by Bloomberg. Besides the U.S., only two other developed markets -- the U.K. and New Zealand -- haven't dropped 20 percent or more from their most- recent highs.

Mitsubishi Corp.

Trading firms and commodity-related companies declined in Tokyo after oil and copper prices fell. Mitsubishi Corp., which gets about 43 percent of its revenue from commodities, slumped 5.7 percent to 1,429 yen, the biggest decline on the Nikkei 225. Smaller rival Mitsui & Co. lost 2.9 percent to 1,043 yen.

Crude oil tumbled 2 percent in New York yesterday to its lowest level in more than a year amid concern that slower growth will mean less fuel consumption. Copper futures for December delivery fell below $3 a pound to a 14-month low on signs that demand for industrial metals will wane.

Kawasaki Kisen dropped 4.5 percent to 148 yen after saying it expects a net loss of 30 billion yen in the fiscal year ending March 31 because of slumping shipping rates and a drop in the value of shares it owns. Japan's third-largest shipper by sales had forecast a profit of 2 billion yen.

Komatsu Ltd., the world's second-largest maker of construction and mining equipment, slumped 5.1 percent to 1,540 yen. Morgan Stanley MUFG Securities Co. lowered its target price on Komatsu to 2,900 yen from 3,400 yen, citing falling revenue from China.

Automakers, still affected by parts shortages stemming from Japan's March 11 earthquake disaster, declined after reporting falling sales in the U.S. Toyota Motor Corp. dropped 2.5 percent to 2,568 yen. The automaker said sales plunged 17 percent last month in the U.S., its largest market.

Honda Motor Co.'s U.S. sales slipped 8 percent, exceeding a 6.1 percent estimate by five analysts' in a Bloomberg survey. Shares of Honda lost 2.8 percent to 2,202 yen.

--With assistance from Yoshiaki Nohara and Toshiro Hasegawa in Tokyo. Editors: Jason Clenfield, Jim Powell.

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Japan Stocks Rise as Germany, France Express Support for Greece - BusinessWeek

September 15, 2011, 3:34 AM EDT By Norie Kuboyama

Sept. 15 (Bloomberg) -- Japanese stocks advanced, with the Nikkei 225 Stock Average rising the most in a week, after German and French leaders said they are convinced Greece will remain in the euro zone and speculation grew that China may help the region’s most-indebted nations.

Kyocera Corp., an electronics maker that gets almost 20 percent of its sales in Europe, added 2.1 percent after the euro appreciated against the yen, boosting the exporter’s earnings outlook. Sumitomo Metal Industries Ltd., Japan’s No. 3 steelmaker, jumped 3.8 percent after Credit Suisse Group AG raised its stock price estimate. Elpida Memory Inc. paced chipmakers higher after saying it may shift some production overseas.

The Nikkei 225 advanced 1.8 percent to 8,668.86 at the 3 p.m. close in Tokyo, its biggest increase since Sept. 7. The broader Topix added 1.4 percent to 751.76, with more than five shares rising for each that fell.

“There was a concern that France and Germany would one- sidedly blame Greece and show no support, but the situation on Greece was not as bad as expected,” said Mitsushige Akino, who oversees about $600 million in Tokyo at Ichiyoshi Investment Management Co. ”Following the stronger euro, more companies sensitive to the euro on earnings will likely be bought.”

The Topix has fallen 16 percent this year amid concern U.S. growth is sputtering and Europe’s debt crisis will damage the banking system, damping demand in two of Japan’s biggest export markets.

Support For Greece

The Standard & Poor’s 500 Index advanced for a third day yesterday in New York, rising 1.4 percent. French President Nicolas Sarkozy and German Chancellor Angela Merkel are “convinced” Greece will remain in the euro area, according to a statement issued by Sarkozy after they spoke to Greek Prime Minister George Papandreou by telephone. Futures on the S&P 500 were little changed today.

China is willing to buy the bonds of nations hit by the debt crisis, Caijing reported on its website yesterday, citing Zhang Xiaoqiang, a vice chairman of the National Development and Reform Commission.

Japanese exporters to Europe gained after the region’s shared currency appreciated against the majority of its most- traded counterparts. The euro advanced to 105.29 yen at the close of stock trading today in Tokyo, compared with 104.83 yesterday.

‘Buying Trigger’

Kyocera added 2.1 percent to 6,750 yen. Ricoh Co., an office-equipment and camera maker that obtains almost a quarter of its revenue in Europe, climbed 2.2 percent to 662 yen.

The euro’s advanced was a “buying trigger,” said Seiichiro Iwamoto, who helps oversee about $35 billion in Tokyo at Mizuho Asset Management Co. “Many companies are hedging for the dollar, but not for the euro. So, the impact from the euro’s appreciation on earnings is big.”

Sumitomo Metal Industries advanced 3.8 percent to 166 yen after Credit Suisse raised its price target for the steelmaker to 230 yen from 220 yen, citing higher prices for the company’s seamless pipes. Nippon Steel Corp. gained 3.6 percent to 231 yen after Credit Suisse raised its profit outlook for Japan’s No. 1 steelmaker.

Elpida, the world’s third-largest memory chipmaker, jumped 5 percent to 564 yen after saying it may shift some production to Taiwan as part of plans to cope with a stronger yen and an industry slump. Elpida has lost 40 percent this year.

Chip-related companies also advanced after the Philadelphia Semiconductor Index, which tracks the performance of 30 industry stocks, rose yesterday for a third day to its highest level since Aug. 3. Dainippon Screen Manufacturing Co., a maker of chip-making equipment, soared 6 percent to 479 yen. Advantest Corp., the world’s biggest producer of chip testers, climbed 2.7 percent to 885 yen.

--With assistance from Toshiro Hasegawa in Tokyo. Editors: Jason Clenfield, John McCluskey.

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.

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Stocks in Japan Rebound; Suzuki, Volkswagen Alliance Unravels - 123Jump.com

6:00 PM Tokyo ? Stocks in Japan rebounded after a steep selloff in the last five days. The benchmark index is still down 16% for the year and hovered above the low last seen in March. The euro dropped to a 10-year low against the yen.

Stocks in Japan rebounded after weak trading in the last three days. The Nikkei index rebounded 1% but traded near the lows last seen in March at the time of triple disaster.

The Nikkei 225 Stock Average rose 1% or 80.88 to 8,616.55 and the broader Topix index added 1.2% or 8.56 to 749.82.

The yen edged lower to 77.85 from 77.55 against one dollar but the euro dropped to a 10-year low to 105.25 after trading at 103.90 on Monday.

Trading volume on the First Section on the Tokyo Stock Exchange decreased to 1.68 billion shares, lower than 1.69 billion shares on Monday. Declining issues were 1,225 and rising stocks were 333 in Tokyo trading.

Stock Movers

Nintendo Co dropped 5.1% to 12,320 yen after investors sold shares ahead of the gathering on its 3DS handheld devices today. At the conference the company released several new software and games to support the declining sales.

Stocks of competitors declined following the slide in Nintendo stock. Capcom fell 8.3% to 1,974 yen and Square Enix dropped 3.9% to 1,468 yen.

Elpida Memory soared 13% to 557 yen on the rising DRAM prices and Advantest Corp fell 36 yen or 4% to 892 yen. Renesas Electronics rose 23 yen to 477 yen.

Mitsubishi UFJ Financial Group rose 8 yen to 331 yen and Sumitomo Mitsui Financial Group increased 1.2% to 2,105 yen. Mizuho Financial Group added 1 yen to 112 yen.

Inpex Corp increased 1.6% to 490,500 yen and Japan Petroleum Exploration Co increased 2% to 3,010 yen.

Nippon Steel increased 1.4% to 221 yen and JFE Holdings, Inc rose 25 yen to 1,721 yen. Kobe Steel, Ltd added 4 yen to 137 yen.

Toyota Motor increased 0.9% to 2,649 yen and Honda Motor Co. added 1.3% to 2,289 yen and Nissan Motor gained 1 yen to 657 yen.

Toyota said it will construct a new factory in Indonesia.

Suzuki Motor increased 3.6% to 1,538 yen after it announced its decision to terminate its cooperation with Volkswagen AG. The two companies entered into a cooperation agreement after VW took 20% stake in the company to gain access to fast growing market in India.

However, two companies could not find projects to collaborate and the tensions rose after Suzuki decided to work with Fiat for a small engine.

Sony Corp fell 7 yen to 1,497 yen, Panasonic Corp fell 12 yen to 740 yen and Canon Inc increased 0.7% to 3,435 yen.

Fanuc rebounded 2.3% after falling for three days in a row to 10,610 yen. Kyocera added 3.4% to 6,740 yen.

Construction equipment makers liked to China closed lower. Komatsu added 2.7% to 1,799 yen and Hitachi Construction Machinery Co gained 2.8% to 1,340 yen.

Shipping companies closed higher. Nippon Yusen KK added 1.8% to 225 yen and Mitsui O.S.K. Lines Ltd added 14 yen to 326 yen. Kawasaki Kisen Kaisha Ltd added 6 yen to 183 yen.

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Japanese Stocks Fall on Europe Transaction-Tax Plan; Sony, Mizuho Decline - Bloomberg

Japanese stocks fell for the first time in three days as European leaders said they won’t expand a fund to end the region’s debt crisis and U.S. housing starts dropped, reviving concern exporters’ earnings will be curbed.

Toyota Motor Corp. (7203), the world’s largest carmaker, lost 1.5 percent after French President Nicolas Sarkozy and German Chancellor Angela Merkel rejected a plan to expand the rescue fund at a meeting in Paris. Inpex Corp. (1605), Japan’s biggest energy exploration company, declined 3 percent as crude oil fell yesterday. Sumco Corp. (3436), a maker of silicon wafers, tumbled 5.1 percent after Dell Inc. (DELL) cut its revenue forecast following sluggish consumer demand.

The Nikkei 225 Stock Average gave up 0.6 percent to 9,057.26 at the 3 p.m. close in Tokyo. The broader Topix index dropped 0.3 percent to 776.65.

“Europe has been facing financial problems and now we are seeing the economy is slowing,” said Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which oversees about $104 billion.

Futures on the Standard & Poor’s 500 Index slid 0.2 percent today. In New York, the index fell 1 percent to 1,192.76 yesterday as the German and French leaders rejected selling euro bonds and expanding the 440 billion-euro ($633 billion) rescue fund. The leaders also proposed resubmitting a financial- transaction tax that was rejected in 2010.

The Paris meeting “confirmed debt issues cannot be resolved in a short period of time,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc.

Exporters declined after reports showed economic growth in Europe and the U.S. is slowing, hurting the outlook for overseas earnings. Toyota lost 44 yen to 2,855 yen. Sony Corp. (6758), Japan’s biggest exporter of consumer electronics, slid 0.8 percent to 1,687 yen. Honda Motor Co., Japan’s third-largest carmaker, sank 2.5 percent to 2,552 yen.

Gross domestic product in the 17-nation euro area expanded 0.2 percent in the second quarter from the previous three months, when the economy grew 0.8 percent, the European Union’s statistics office in Luxembourg said in a statement yesterday. That’s the weakest growth since the euro region emerged from a recession in late 2009 and was less that the 0.3 percent median estimate of 34 economists in a Bloomberg News survey.

In the U.S., housing starts fell 1.5 percent in July from June, the Commerce Department reported yesterday. Building permits, a proxy for future construction, also dropped.

“The U.S. housing numbers were not strong, and that signals a slowdown in the U.S. economy may persist,” SMBC Nikko Securities’ Nishi said.

Resource companies had the biggest drop among the 33 industry groups in the Topix as oil prices fell yesterday. Inpex lost 16,000 yen to 510,000 yen. Japan Petroleum Exploration Co. (1662), the second-biggest oil driller, slid 1.5 percent to 3,305 yen.

Crude oil for September delivery declined 1.4 percent to settle at $86.65 a barrel in New York yesterday. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum dropped 0.5 percent.

Semiconductor-related stocks fell after Dell, the second- largest personal computer maker in the U.S., missed analysts’ sales estimates and cut its revenue forecast, hurt by sluggish spending on desktop computers and consumer technology.

Second-quarter sales rose less than 1 percent to $15.7 billion, Texas-based Dell said yesterday in a statement. Analysts had estimated revenue of $15.8 billion in the period, which ended July 29, according to Bloomberg data. The company now expects sales growth of between 1 percent and 5 percent this year, down from a previous range of 5 percent to 9 percent.

Sumco plunged 54 yen to 996 yen, the lowest close since December 2008. Elpida Memory Inc. (6665), which makes memory chips, retreated 3.9 percent to 517 yen. Renesas Electronics Corp. (6723), a semiconductor maker, declined 2.7 percent to 534 yen, a level not seen since November 2009.

Sumco declined also after UBS AG cut its stock price estimate to 1,100 yen from 1,600 yen because of weakening earnings on lower sales volume of semiconductor wafers and falling prices of solar cell wafers, according to a report dated yesterday.

Among stocks that rose, general contractors advanced as JPMorgan Chase & Co. raised its rating on the sector’s shares, saying major contractors will receive orders to clear rubble from the March earthquake.

Kajima Corp. (1812), Japan’s biggest general contractor by revenue, increased 3 percent to 238 yen. Taisei Corp. (1801), the third-largest, climbed 4.3 percent to 195 yen. Obayashi Corp. (1802), the No. 4, gained 3.7 percent to 367 yen.

Shipping lines advanced the most in the Topix as The Baltic Dry Index, a measure of shipping costs for commodities, rose for a fifth day yesterday, increasing 2.9 percent.

To contact the reporter on this story: Akiko Ikeda in Tokyo at iakiko@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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Cheap prices and Japan recovery lift world stocks (Reuters)

By Jeremy Gaunt, European Investment Correspondent Jeremy Gaunt, European Investment Correspondent – Mon Aug 15, 4:10 am ET

LONDON (Reuters) – World stocks climbed further out of their August hole on Monday, lifted by signs of earlier-than-expected recovery in Japan and a growing belief that shares may now be cheap.

European shares, however, failed to keep early gains and dropped into negative territory.

Gold and the Swiss franc, two of the main beneficiaries of recent global risk aversion, fell.

Investors were also weighing calls by Italian Economy Minister Giulio Tremonti for a more coordinated response to the euro zone debt crisis, including the creation of euro bonds, against an immediate rejection of the idea from Germany.

MSCI's all-country world stock index, a broad measure of global equity health, was up half a percent, ratcheting up roughly a six percent gain since hitting an 11-month low last Thursday.

"The markets have been technically very oversold and on that basis alone, they are due for a period of remission from the selling," said Mike Lenhoff, chief strategist at wealth manager Brewin Dolphin.

Bank of America-Merrill Lynch said a "buy" signal had been triggered last week as outflows out of risky assets hit significant levels.

"We note that since 2004, global equities have rallied an average 6.7 percent (in the four weeks that followed the trigger)," the bank's strategists wrote in a note.

Nonetheless, the pan-European FTSEurofirst 300 stocks index was slightly lower.

Shares in Asia were boosted by data showing Japan's economy shrank less than expected in April-June following a devastating earthquake and tsunami in March.

Japan's Nikkei closed up 1.37 percent.

SPILL OVER

The albeit tentative rise in confidence spilled into other assets.

The euro extended its gains against the Swiss franc to more than 3 percent after a Swiss newspaper report said the Swiss National Bank was poised to set a limit for the euro-Swiss franc exchange rate and will use all means to defend it.

The dollar also rallied against the franc, surging 2.7 percent to 0.79883.

Otherwise the U.S. currency was down around a quarter of a percent against a basket of major currencies.

On the euro zone crisis front, Tremonti's call for common euro zone debt issuance was rejected by German Finance Minister Wolfgang Schaeuble, who said such euro bonds would undermine the basis for the single currency by weakening fiscal discipline among member states.

German Chancellor Angela Merkel and French President Nicolas Sarkozy are due to meet in Paris on Tuesday to discuss the crisis.

Core euro zone debt was mixed with yields rising on longer-term bonds.

(Additional reporting by Atul Prakash and Blaise Robinson; Editing by Toby Chopra)

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