Mon, July 26, 2010
Business > Markets

Nikkei closes up 0.77 pct as euro stress tests calm nerves

2010-07-26 10:32:00 GMT2010-07-26 18:32:00 (Beijing Time)  Xinhua English

TOKYO, July 26 (Xinhua) -- Tokyo stocks rose Monday with the key Nikkei stock average gaining 0.77 percent on the release of stress tests among European banks easing fears the region's recovery won't stall and a weaker yen gave some export-related issues some relief.

The 225-issue Nikkei Stock Average gained 72.70 points from Friday to finish at 9,503.66, the highest closing level since July 15, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange was up 4.59 points, or 0.55 percent, to 845.88.

The result of European stress tests found that seven banks need to raise a combined 3.5 billion euro (4.5 billion U.S dollars) of capital. Germany's Hypo Real Estate Holding AG, Agricultural Bank of Greece SA and five Spanish savings banks, it was reveled, did not have the requisite financial reserves to maintain a classification of "tier 1 capital ratio," which requires, in the case of a recession and issues of sovereign-debt, reserves of at least 6 percent.

According to the regulators the institutions which failed the stress tests are in "close contact" with state authorities as to how they will raise the necessary capital, the Committee of European Banking Supervisors, which ran the assessments of 91 lenders, said.

"Anxieties over the results of the stress test had weighed on the market," said on equities manger in Tokyo. "Shares are rising after banks holdings were disclosed, including the amount of sovereign debt."

"European banks will have to raise less capital than some people expected, so that's positive for investors," added another strategist.

Brokers said that following the result of the stress tests investors chased a wide range of shares, with confidence bolstered by a weaker yen.

The yen fell to 87.67 to the dollar and 113.48 against the euro during trading hours on Monday, boosting the competitiveness of Japanese firms with oversees exposure.

Mazda Motor Corp. added 1.5 percent to 210 yen. The automaker was rated "outperform" in new coverage by Mizuho Securities Co and Toyota Motor Corp. rose 0.2 percent to 3,090 yen after the Nikkei newspaper said it is likely to have secured an operating profit of about 100 billion yen (1.1 billion U.S. dollars) in April-June, thanks to solid sales and a sharp recovery from the previous year' s loss.

Nidec Copal Corp. was a notable gainer on today's market climbing 2.9 percent to 1,388 yen. The maker of electronic components for optical equipment said first-quarter net income jumped to 1.33 billion yen from 201 million yen (2.29 million U.S. dollars) a year earlier with an increase in sales.

Stealing the headlines, however, was Softbank Corp., the sole provider of Apple Inc.'s iPhone in Japan. The firm added 0.9 percent to 2,538 yen, following reports in the Nikkei newspaper saying the company had a record operating profit of about 190 billion yen (2.17 billion U.S. dollars) for April-June, an 80 percent increase from the same quarter a year earlier.

However, the market's gains were capped as investors opted to lock in gains made rather than chase higher issues, brokers said and some pointed to pessimistic outlooks for domestic earnings contributing to today's thin trade as investors took up increasingly passive, somewhat circumspect stances, later prior to the 3 p.m. bell.

Suzuki Motor Corp. was a notable drag on the market skidding down 3.2 percent to 1,764 yen as its Indian unit Maruti Suzuki India Ltd. plummeted in Mumbai trading after first-quarter net income unexpectedly declined and Citigroup Inc. and Nomura Holdings Inc. lowered their ratings on the company.

Some 1.30 billion shares changed hands on the Tokyo exchange's First section, down from Friday's volume of 1.96 billion, with advancing issues outnumbering declining ones by 1,127 to 381.

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