Bloomberg News

Nikkei 225 Rises to Seven-Week High as Greek Crisis Concern Ebbs

June 29, 2011

June 29 (Bloomberg) -- Japanese stocks advanced, pushing the Nikkei 225 Stock Average to its highest level in seven weeks, after commodity prices gained and amid increasing confidence Greece may avoid a default, reducing the risk to bank earnings.

Canon Inc., which counts Europe as its largest market, rose 2.1 percent. Sumitomo Mitsui Financial Group Inc., Japan’s second-largest publicly traded bank, climbed 1.2 percent. Mitsui & Co., the country’s No. 2 trading company, increased 2.1 percent. Tokyo Electric Power Co., operator of the crippled Fukushima Dai-Ichi power station, advanced 2.9 percent after shareholders voted not to abandon the nuclear power business.

The Nikkei 225 rose 1.5 percent to 9,797.26 at the 3 p.m. close in Tokyo, the highest level since May 11. The broader Topix index gained 1.7 percent to 844.11, with seven stocks climbing for each that fell.

“European nations have reached an agreement on a bailout plan for Greece to some extent and most investors expect the country will be able to pass its austerity measures,” said Masaru Hamasaki, who helps oversee the equivalent of $18 billion as chief strategist at Toyota Asset Management Co. in Tokyo. “That boosted investment in risky assets.”

The Topix index has lost 9.3 percent since March 10, the day before a magnitude-9 earthquake and tsunami devastated Japan’s northeast coast, triggering the worst nuclear accident in 25 years and leaving more than 23,000 people dead or missing.

Seeking Bailout Deal

Exporters that sell products in Europe gained today. Canon rose 2.1 percent to 3,820 yen. Fanuc Corp., a maker of factory robots that gets 11 percent of sales in the region, jumped 3.6 percent to 13,430 yen. The company plans to more than double sales to 1 trillion yen ($12.4 billion) in three years, the Nikkei newspaper reported, citing Honorary Chairman Seiuemon Inaba.

Japanese banks gained as Europe inched toward agreement on how to contain Greece’s debt crisis. The International Monetary Fund has said a default could “spill over,” hurting banks in the region that hold Greek bonds and increasing the cost of raising money in global debt markets.

Sumitomo Mitsui Financial Group climbed 1.2 percent to 2,437 yen. Mizuho Financial Group Inc., Japan’s third-biggest lender by market value, advanced 2.3 percent to 131 yen.

Germany’s biggest banks and insurers will meet today with the Finance Ministry in Berlin in search of an agreement on how creditors will contribute to a Greek aid package, two people with knowledge of the matter told Bloomberg.

Voting in Greece

Stocks advanced as Greek lawmakers prepared to vote today and tomorrow on budget cuts and tax increases that European officials require for delivering bailout money. Greece needs loans from Europe and the IMF to cover 6.6 billion euros ($9.5 billion) of maturing bonds in August.

The yen depreciated to 116.67 against the euro, the lowest level in two weeks, compared with 115.28 at the close of stock trading in Tokyo yesterday. Against the dollar, Japan’s currency weakened to 81.27 from 80.79. A weaker yen benefits Japanese exporters by boosting the value of their overseas sales.

Trading houses climbed after crude oil for August delivery gained yesterday the most in almost six weeks and the London Metal Exchange Index of metal prices rose. Mitsui & Co. advanced 2.1 percent to 1,384 yen. Mitsubishi Corp., Japan’s largest commodities trader, rose 0.9 percent to 1,990 yen. Inpex Corp., the country’s biggest energy explorer, increased 2.1 percent to 589,000 yen.

Utilities Advance

Power companies had the largest gain among 33 Topix industry groups after shareholders of Tokyo Electric Power voted to continue the atomic power business. The company yesterday held its first general meeting since the Fukushima accident wiped about $36 billion off the utility’s market value. Tokyo Electric advanced 2.9 percent to 325 yen

Shareholders of Chubu Electric Power Co. and Kyushu Electric Power Co. also voted to not to abandon the nuclear energy business. Chubu Electric increased 4 percent to 1,533 yen, while the Kyushu utility jumped 5 percent to 1,389 yen.

Japan’s trade ministry said today in Tokyo that industrial production increased 5.7 percent in May from April, the biggest gain since 1953, a sign that the economy is recovering after county’s strongest earthquake shut factories and caused power shortages. Manufacturing output was better that the 5.5 percent increase predicted in a Bloomberg survey of economists.

Toyota Motor Corp. advanced 1.7 percent to 3,270 yen after the industrial production report. The carmaker’s U.S. sales plunged by a third because of supply-chain disruptions following Japan’s March 11 disaster. Aisin Seiki Co., a supplier of parts to Toyota, climbed 2.5 percent to 3,085 yen.

--With assistance from Satoshi Kawano in Tokyo. Editors: Jason Clenfield, Nick Gentle.

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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