Bloomberg News

Nikkei 225 Declines as Yen Reaches 10-Year High Against Euro

December 29, 2011

Dec. 29 (Bloomberg) -- The Nikkei 225 Stock Average fell for a third day as a surge in lending by the European Central Bank to ease the debt crisis sent the euro to a 10-year low against the yen, clouding the earnings outlook for exporters.

Canon Inc., maker of office equipment that gets about a third of its sales in Europe, fell 0.4 percent. Elpida Memory Inc. sank 5.1 percent after a report the chipmaker may seek to delay repayment of bailout funds. Olympus Corp., the camera maker that has lost about its value amid an accounting scandal, rebounded 5.3 percent.

The Nikkei 225 fell 0.3 percent to 8,398.89 at the 3 p.m. close in Tokyo. With one trading day left this year, the gauge is headed for an 18 percent drop in 2011, its biggest full-year decline since 2008. Volume on the Nikkei was about half the 100- day average, according to data compiled by Bloomberg. The broader Topix Index finished up 0.1 percent after earlier dropping as much as 0.6 percent.

The surge in ECB lending “has caused the euro to drop against the yen, fueling investors’ concern on the region’s debt issues,” said Kenichi Hirano, general manager and strategist at Tachibana Securities Co. in Tokyo. “Some investors are buying cheap stocks as institutional investors have already sold out of Japanese stocks.”

ECB Lending

Futures on the Standard & Poor’s 500 Index rose 0.4 percent today. The measure dropped 1.3 percent in New York yesterday after the ECB said its balance sheet ballooned to a record following last week’s loans to banks. The loans were meant to encourage banks to buy government bonds.

The 17-nation currency depreciated to as low as 100.36 yen today in Tokyo, the lowest since 2001. A weaker euro reduces the value of European income at Japanese companies when repatriated.

Exporters to Europe declined. Canon fell 0.4 percent to 3,400 yen. Ricoh Co., a maker of cameras and copiers that gets 21 percent of its revenue in Europe, slid 0.6 percent to 663 yen.

In Japan, a computer glitch slowed trading “momentarily” on the Tokyo Stock Exchange today, bourse spokesman Satoshi Mimura said. A blockage in some networking cables was fixed and the problem didn’t affect transactions, Mimura said by phone. Mimura declined to say how long the problem lasted.

The following are among the most active shares in the Japanese market today. Stock symbols are in parentheses after company names.

Asahi Tec Corp. (5606 JT), a maker of iron products for cars, soared 10 percent to 32 yen, its highest since March 11. RHJ International SA (RHJI BB) agreed to sell its stake in Asahi Tec to private-equity firm Unison Capital Group, according to a statement.

Cosmos Pharmaceutical Corp. (3349 JT), a drugstore operator, advanced 3.4 percent to 3,975 yen. The retailer boosted its full-year net income forecast 16 percent to 6.81 billion yen ($87.6 million) on growing sales buoyed by good weather and consumers who prefer low-end products.

Elpida Memory Inc. (6665 JT) sank 5.1 percent to 351 yen after the Asahi newspaper reported the company may seek to delay payments to the government, saying the European crisis had hurt earnings. The company in August 2009 received a 30 billion yen capital injection from the state-owned Development Bank of Japan following a record loss.

J Trust Co. (8508 JO), a financial-services company, surged 11 percent to 556 yen. Consumer lender Takefuji Corp. (8564 JP) said it chose J Trust to acquire the company for 25.2 billion yen after South Korea’s A&P Financial Co. was unable to meet obligations. Takefuji will be reorganized under J Trust’s Lopro unit, according to a statement.

Mitsubishi Electric Corp. (6503 JT), a maker of electronic equipment, rose 1.8 percent to 724 yen. The company expects operating profit next fiscal year will probably exceed the record 267.2 billion yen reached in the fiscal 2007, the Nikkei newspaper reported, citing President Kenichiro Yamanishi. Orders for factory automation systems are recovering at the plants damaged by floods in Thailand, the report said.

Nachi-Fujikoshi Corp. (6474 JT), a maker of bearings and machine tools, gained 2.4 percent to 337 yen. Operating profit at Nachi-Fujikoshi probably jumped 80 percent to about 15 billion yen in the fiscal year ended November due to strong sales of robots and machine tools for China and other emerging markets, the Nikkei newspaper reported, without citing anyone.

Sharp Corp. (6753 JT), Japan’s largest producer of liquid- crystal displays, lost 3.2 percent to 666 yen, extending yesterday’s 3.2 percent drop, after it and other display producers including Samsung Electronics Co. agreed to pay $538.6 million to settle antitrust claims by indirect purchasers.

Terumo Corp. (4543 JT), a maker of medical devices, slipped 3.2 percent to 3,630 yen after Nomura Holdings Inc. cut the stock price estimate on the stock to 4,600 yen from 5,100 yen, citing an expected drop in catheter prices.

-- With assistance from Masaaki Iwamoto in Tokyo. Editors: Jim Powell, Jason Clenfield.

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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