Bloomberg News

Japan’s Stocks Rise for Second Day; Nuclear Power Companies Fall

June 01, 2011

June 1 (Bloomberg) -- Japanese stocks added to yesterday’s advance, the biggest in two months, even as nuclear power producers tumbled after Bank of America Merrill Lynch cut their ratings in the wake of the Fukushima accident.

Idemitsu Kosan Co., Japan’s third-biggest refiner by capacity, jumped 2.8 percent after crude prices advanced amid signs Europe’s debt crisis may ease, stoking speculation fuel demand will increase. Tokyo Electric Power Co., owner of the crippled Fukushima Dai-Ichi plant, sank 5.7 percent after Merrill Lynch said the utility’s future as a listed company is uncertain. Chubu Electric Power Co. lost 2.2 percent after the brokerage cut its rating on the utility.

The Nikkei 225 Stock Average rose 0.3 percent to 9,719.61 at the 3 p.m. close in Tokyo after dropping as much as 0.4 percent. The gauge added 2 percent yesterday, the most since March 30, amid optimism the European Union will approve more aid for Greece, without forcing a debt default.

“Investors are less concerned about Europe’s finances and are returning to risk assets, which is positive for the market,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc.

The broader Topix rose 0.1 percent to 839.41. The index has tumbled 9.8 percent since a magnitude-9 earthquake and tsunami devastated Japan’s northeast coast on March 11, disabling Tokyo Electric’s plant and disrupting supply chains at manufacturers.

U.S. Home Prices

Investors shrugged off a report showing U.S. home prices fell. Shares also gained even as mounting discord over Prime Minister Naoto Kan’s handling of the earthquake disaster emboldened opposition lawmakers to force a no-confidence vote, which could come as early as tomorrow.

Home prices in 20 U.S. cities dropped in March to the lowest level since 2003, suggesting that the industry which triggered the recession has yet to recover. A separate report showed confidence among U.S. consumers unexpectedly declined in May to a six-month low.

At least fifty-three members of Kan’s own Democratic Party of Japan will support a no-confidence motion, according to an Asahi newspaper poll today. While that leaves the main opposition Liberal Democratic Party at least 32 votes short of passage, the paper said it had contacted less than 60 percent of the DPJ’s legislators.

Crude Rises

Idemitsu gained 2.8 percent to 9,240 yen after oil gained and Citigroup Inc. boosted the company’s rating to “buy” from “hold.” Japan Petroleum Exploration Co., the nation’s second- largest oil explorer, advanced 1.4 percent to 3,935 yen. AOC Holdings Inc., a driller whose target stock price was raised to 680 yen from 660 yen by Mitsubishi UFJ Morgan Stanley Securities Co., climbed 3.1 percent to 505 yen.

Crude for July delivery rose as much as 52 cents to $103.22 a barrel in electronic trading today in New York. The fuel gained 2.1 percent to settle at $102.70 a barrel yesterday.

Tokyo Electric sank 5.7 percent to 299 yen after Merrill Lynch said the future of the utility’s listing hinges on politics. Shares of the company, which posted the biggest loss on record for a non-financial Japanese company, have fallen more than 85 percent since March’s disaster.

“For now, the company and the government plan to maintain the utility’s listing,” Merrill Lynch said in a Japanese- language report dated yesterday. “Depending on the future direction of politics, that may change.”

Chubu Electric, which last month halted one its reactors, lost 2.2 percent to 1,254 yen. Merrill Lynch cut its rating on the stock to “neutral” from “buy,” citing the cancellation of plans to buy back shares.

Hokuriku Electric Power Co. and Hokkaido Electric Power Co. also fell after the brokerage downgraded them to “underperform” from “neutral.”

“There’s no prospect that the radiation problem will be solved anytime soon,” said Hisakazu Amano, who helps oversee about $29 billion at Tokyo-based T&D Asset Management Co. “Other utilities are inevitably going to have to share the costs of the cleanup.”

--Editors: Jason Clenfield, Sam Waite.

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Satoshi Kawano in Tokyo at Skawano1@bloomberg.net.

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


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