Bloomberg News

Nikkei Rises From 2 1/2-Year Low as Trichet Eases Europe Worry

September 13, 2011

Sept. 13 (Bloomberg) -- Japan’s Nikkei 225 Stock Average rebounded from a two-and-a-half-year low after European Central Bank President Jean-Claude Trichet said the region has enough “weaponry” to keep its debt crisis from spreading.

Mitsubishi UFJ Financial Group Inc., Japan’s largest lender by market value, advanced 2.5 percent. Fanuc Corp., the world’s biggest maker of machine-tool controls, gained 2.3 percent, recovering part of a 15 percent loss last week. Elpida Memory Inc. led chip-related companies higher on signs semiconductor prices have bottomed.

The Nikkei 225 rose 1 percent to 8,616.55 at the 3 p.m. close in Tokyo, rebounding from the lowest level since April 2009 yesterday. The broader Topix gained 1.2 percent to 749.82 after Trichet signaled support for the banking system, saying: “We have the weaponry to provide what is necessary.”

“Trichet said the right thing,” said Kiyoshi Ishigane, a senior strategist in Tokyo at Mitsubishi UFJ Asset Management Co., which oversees the equivalent of $84 billion. “Still, even if his comments helped to prevent contagion, Europe has a debt problem, beginning with Greece, that can’t be solved until the economy heals.”

The Topix has fallen 17 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. The decline has cut the price of shares on the index to 0.9 times book value, near the lowest since March 2009.

Italy, China Talk

The Standard & Poor’s 500 Index rebounded 0.7 percent yesterday, reversing losses in the last 90 minutes of trading, after the Financial Times reported Italy aims to sell a “significant” amount of bonds and stakes in strategic companies to China. Futures on the S&P 500 gained 0.3 percent today.

While Italian officials have had talks with Chinese counterparts about potential investment in the euro region’s third-largest economy, the purchase of Italian bonds by China was not the focus of the discussion, an Italian official said on condition of anonymity.

The yen depreciated to as low as 105.64 against the euro today in Tokyo, compared with 104.35 at the close of stock trading yesterday, after Trichet’s comments. A weaker yen boosts overseas income at Japanese companies when repatriated.

‘Short-Term Positive’

“The fact that the yen stopped gaining against the euro is a short-term positive,” said Mitsubishi UFJ Asset’s Ishigane.

Japanese banks gained on speculation the ECB will prevent Europe’s sovereign debt crisis from spreading to the financial sector. Mitsubishi UFJ advanced 2.5 percent to 331 yen. Smaller Sumitomo Mitsui Financial Group Inc. climbed 1.2 percent to 2,105 yen.

Fanuc and electronics-parts maker Kyocera Corp. contributed the most to gains in the Nikkei, rebounding from losses last week. Fanuc climbed 2.3 percent to 10,610 yen. Kyocera, which depends on Europe for almost 20 percent of its sales, jumped 3.4 percent to 6,740 yen.

Chip-related companies advanced after the Philadelphia Semiconductor Index, which tracks the performance of 30 industry stocks, yesterday rallied 3 percent to the highest since Aug. 15.

Elpida, the world’s third-largest maker of computer-memory chips, soared 13 percent to 557 yen. Advantest Corp., the biggest producer of chip testers, advanced 4.8 percent to 896 yen. Dainippon Screen Manufacturing Co., a maker of chip- manufacturing equipment, climbed 4.8 percent to 462 yen.

Among decliners, Nintendo Co. sank 5.1 percent to 12,320 yen after analysts said the company will probably sell fewer 3-D handheld game players than it’s targeting because price cuts and new accessories will fail to make up for a lack of hit titles.

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

To contact the reporter on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net.

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


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