Bloomberg News

Japanese Stocks Snap Three-Day Win Streak as Yen Advances

July 02, 2012

Japan’s Nikkei 225 Stock Average (NKY) fell, snapping a three-day winning streak, as the yen strengthened in the last hour of trading and exporters including Nissan Motor Co. reversed gains. Shares rose earlier after a Bank of Japan manufacturing survey beat estimates.

Nissan lost 0.7 percent after rising as much as 2.3 percent as Japan’s currency gained against 15 of its 16 major peers. Yamada Denki (9831) Co. sank 4.6 percent after JPMorgan Chase & Co. cut the electronics retailer’s target price. Nippon Yusen K.K. jumped 2.4 percent on a plan to double sales at the shipping line’s logistics operations.

The Nikkei 225 fell less than 0.1 percent to 9,003.48 at the 3 p.m. close in Tokyo after rising as much as 1.1 percent, with volume almost 20 percent below the 30-day average. The broader Topix Index (TPX) dropped 0.1 percent to 769.34. Both indexes rose 1.5 percent on the previous trading day after European leaders struck agreements on the debt crisis.

“The EU summit yielded a policy on Spain, but investors are concerned that a lot of the details still aren’t decided,” said Takashi Miyazaki, a senior strategist who helps oversee about $70 billion at Mitsubishi UFJ Asset Management Co. in Tokyo. “Europe’s problems aren’t front-and-center for the moment, but markets are going to continue to be jittery unless the U.S. economy shows signs of improvement. Investors are feeling less risk averse, but it’s still difficult to see a bullish scenario.”

Topix Rebound

The Topix has rebounded more than 10 percent since June 4, when the index fell to its lowest level since 1983. Stocks rose after Greek voters elected pro-bailout parties and European leaders agreed to ease repayment rules for Spanish banks and make it easier to recapitalize the region’s troubled lenders.

Shares on Japan’s broadest equities gauge traded at an average of 1.1 times book value, compared with 2.2 times for the Standard & Poor’s 500 Index and 1.4 times for the Europe Stoxx 600 Index. A number less than one means that companies can be bought for less than value of their assets.

Nissan (7201) and other exporters gave up early gains after the yen jumped against the dollar and the euro. Japan’s second- largest carmaker by sales finished the day down 0.7 percent at 743 yen. Sony Corp., Japan’s biggest exporter of consumer electronics, fell 0.5 percent to 1,117 yen.

The yen surged as much as 0.3 percent in the final 60 minutes of trading to as high as 79.50 per dollar. Against the euro, the currency strengthened to 100.34 from 100.69. A stronger yen cuts the value of overseas sales when repatriated.

Yamada Denki

Yamada Denki sank 4.6 percent to 3,870 yen after JPMorgan Chase & Co. cut the retailer’s target price to 4,800 yen from 5,600 yen. The company’s investment rating was cut to neutral from buy at JI Asia, the Asian equity research and sales arm of Japaninvest Group Plc.

Shares rose earlier after the central bank’s quarterly Tankan index of sentiment among large manufacturers rose to minus 1 in June from minus 4 in March. The median estimate of 19 economists surveyed by Bloomberg News was for a reading of minus 4. A negative number means pessimists outnumber optimists.

Among companies that gained, Nippon Yusen rose 2.4 percent to 214 yen after President Yasumi Kudo said freight-forwarding and warehousing businesses led by unit Yusen Logistics Co. will boost sales to 800 billion yen ($10 billion) within seven years.

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net

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


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