Bloomberg News

Japanese Stocks Rise on Greek Vote, Nuclear Restart Prospects

June 30, 2011

June 30 (Bloomberg) -- Japanese stocks rose for a third day after Greece passed austerity measures needed to secure aid from the European Union, and as utilities advanced on expectations they’ll be allowed to restart nuclear plants.

Sony Corp., which sells 20 percent of its PlayStation game consoles and other products in Europe, gained 3 percent. Kyushu Electric Power Co. and other utilities advanced after Kyodo News said a local government has agreed to the restart of halted reactors. Mitsubishi UFJ Financial Group Inc., Japan’s largest lender by market value, climbed 2.1 percent after Deutsche Bank AG raised its rating on the sector.

“There will still be a lot of twists and turns, but Greece has been able to avoid a worst-case scenario,” said Mitsushige Akino, who oversees about $600 million in Tokyo at Ichiyoshi Investment Management Co. “That makes it easier for investors to take on risk.”

The Nikkei 225 Stock Average advanced 0.2 percent to 9,816.09 at the 3 p.m. close in Tokyo. The broader Topix index added 0.6 percent to 849.22 with three stocks rising for each that fell. For the month, both the Nikkei and the Topix rose 1.3 percent, their biggest monthly gains since February.

The value of shares traded on the Tokyo Stock Exchange’s first section totaled 1.32 trillion yen ($16.4 billion), 9.6 percent less than this year’s average of 1.46 trillion yen.

Disaster Decline

The Topix slid 8.8 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.

Japanese shares had also weakened on signs the U.S. economic recovery is slowing and amid the Greek debt crisis, which the International Monetary Fund said might “spill over,” hurting banks that hold the country’s bonds.

Futures on the Standard & Poor’s 500 Index gained 0.1 percent today. The index rose 0.8 percent yesterday as Greece’s parliament passed budget cuts and tax increases that satisfy EU conditions for more bailout money. U.S. banks including Citigroup Inc. and Bank of American Corp. gained after the Federal Reserve raised a ceiling on debit-card transaction fees.

Amid clashes between protesters and police in Athens, Greece’s parliament yesterday approved the first part of an austerity plan aimed at meeting EU requirements and staving off default. EU officials said they wouldn’t provide loans needed to cover bonds maturing in August unless Greece approved the package.

‘Conflicting Interests’

German financial companies yesterday pushed toward an agreement to roll over their Greek bond holdings, a move that would give the cash-strapped country more time to pay, while stopping short of outright debt forgiveness. European officials have called on creditors in the private sector to share the cost of the bailout.

“Amid all of these conflicting interests -- between the Greek government and its people, Germany and its banks -- the different sides found a point of agreement,” said Koichi Kurose, chief economist in Tokyo at Resona Bank Ltd., which holds about $240 billion in deposits. “Still, there isn’t a fundamental resolution yet.

Nuclear Restart

Utilities had the biggest gain among the 33 Topix industry groups after Kyodo News reported the town of Genkai in southwestern Japan will allow Kyushu Electric Power to restart reactors, easing concern local opposition to nuclear power will damage the industry. The Nikkei newspaper today reported that the governor of Saga prefecture showed a ‘tolerant attitude’ toward restarting the reactors after Trade Minister Banri Kaieda said Japan’s government will take responsibility.

About 74 percent of Japanese support a “gradual abolition” of atomic power, following meltdowns at Tokyo Electric Power Co.’s Fukushima Dai-Ichi power station, according to an Asahi newspaper poll this month.

Kyushu Electric jumped 4.2 percent to 1,447 yen, rising for a second day after the Kyodo report. Kansai Electric Power Co., a utility that generates 43 percent of its power using nuclear plants, climbed 4.6 percent to 1,600 yen. Chubu Electric Power Co., operator of a nuclear plant on Japan’s eastern coast shut after the Fukushima accident, advanced 2.4 percent to 1,570 yen.

Makers of parts for nuclear power plants also advanced. Japan Steel Works Ltd. jumped 4.4 percent to 549 yen, the second-biggest gain on the Nikkei. Kimura Chemical Plants Co. surged 15 percent to 402 yen.

Banks Advance

Japan’s largest lenders advanced after Deutsche Bank raised its investment rating on the sector to “overweight” from “market weight,” saying new global banking regulations are less onerous than expected. Mitsubishi UFJ advanced 2.1 percent to 390 yen and was the most-actively traded stock in Japan. Sumitomo Mitsui Financial Group Inc., Japan’s second-largest publicly traded bank, increased 1.3 percent to 2,468 yen. Mizuho Financial Group Inc., the No. 3, gained 0.8 percent to 132 yen.

The Basel Committee on Banking Supervision said on June 25 the world’s largest banks must hold as much as 2.5 percentage points in additional capital as part of efforts to prevent another crisis like the one that stemmed from the 2008 bankruptcy of Lehman Brothers Holdings Inc. Deutsche Bank analysts Yoshinobu Yamada and Thanh Ha Pham said the announcement eased concern banks would have to raise funds.

--Editors: Jason Clenfield, Jim McDonald.

To contact the reporters on this story: Akiko Ikeda in Tokyo at iakiko@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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