RTTNews - With positive cues from Wall Street aiding sentiment and bringing back investors to the ring, the Japanese market opened on a higher note on Friday. The yen's weakness against the U.S. dollar is also contributing to the positive mood in Tokyo in early trading.
However, with stocks finding some resistance at higher levels, the market has now pared a significant portion of its early gains. The Nikkei, which rose to 9,823 earlier this morning, is currently trading at 9,726, up by around 22 points or 0.23%.
On Thursday, the Nikkei 225 Average had closed down 137.13 points or 1.39% at 9,704 after trading in the red throughout the session.
Bank, chemicals, steel, non-ferrous metals and machinery stocks are mostly trading firm. Transport, real estate, textiles, and consumer finance stocks rose sharply in opening trades, but are mostly off their highs at present. Construction, pharma, automobile and foods stocks are trading mixed.
Relo Holdings Inc. has announced that it will buy back all 900,100 shares, or 5.9% of the total outstanding, that shareholders offered via the firm's tender bid. The deal is for 830 yen per share, making for a total price tag of about 747 million yen. The tender offer ended Thursday. Relo, which provides relocation and real estate management services, had originally sought to buy back up to 1.5 million shares. The stock is trading up 1.3% at 997 yen at present.
Shares of chipmaker Elpida Memory Inc. have moved up sharply this morning. The stock, despite trading off its high, is up by as much as 6% at present.
The major chipmaker is all set to become the first applicant for a government program aimed at recapitalizing non-financial companies suffering from temporary business setbacks. The program, established under the revised law for industrial revitalization, authorizes the Development Bank of Japan to inject public funds into struggling non-financial firms. The government is expected to approve the chipmaker's application.
Elpida is still working out the details, but it appears to be angling for up to 40 billion yen in financial assistance. The company posted a net loss of 178.8 billion yen in the year ended March 31 as the price of its mainstay DRAM chips plunged due to an oversupply.
Chiyoda Corp. shot up by over 10% on reports that the firm and South Korea's Samsung Engineering Co. have won a contract to build an oil refinery in Saudi Arabia. The contract, worth about 100 billion yen, was offered by a joint venture between Saudi Arabian Oil Co., known as Saudi Aramco, and Total SA of France. The stock is currently trading with a 7% gain.
Among economic news, the Bank of Japan today released the minutes of its policy board meeting held May 21-22. Minutes of the meeting showed that some Bank of Japan policy board members said the timing of the termination of temporary measures to increase liquidity depends on market conditions.
Some members said that whether or not the bank would continue with various temporary measures, which were to be terminated on or after Sept. 30, should be determined based on close examination of developments in financial markets and corporate financing, the summary of meeting discussions said.
At the meeting, the BOJ upgraded its economic view for the first time since July 2006, saying that although economic conditions have been deteriorating, exports and production are beginning to level out. The board also voted to keep its policy target rate unchanged at 0.1%.
In the currency market, the U.S. dollar traded in the upper 96 yen level early Friday in Tokyo, up slightly from its levels in New York overnight. The yen is currently trading at 96.62 to the U.S. dollar.
Among other markets in the Asia-Pacific region, Australia, Taiwan and Shanghai are trading with modest gains. The Singapore market is trading sharply higher, while the New Zealand and Korean markets are trading flat. Stock markets across the Asia Pacific region had ended Thursday's trading notably lower.
Aided by a series of encouraging economic reports, Wall Street rebounded after some early weakness and closed higher on Thursday with investors hoping for a somewhat swift end to the recession.
A report from the Philadelphia Federal Reserve showed that the pace of contraction in the mid-Atlantic region's manufacturing slowed by much more than economists had been anticipating.
Also, a report from the Conference Board showed that its leading indicators index rose 1.2 percent in May, more than what economists had expected. Additionally, according to the Labor Department, weekly jobless showed the first drop in continuing claims since the week ended January 3rd.
The Dow closed up 58.42 points at 8,555.60 and the S&P 500 closed up 7.66 points at 918.37. The Nasdaq, which had outperformed in the previous session, was the underperformer throughout Friday's session. It ended down 0.34 points at 1,807.72.
Major European markets finished the day on the upside. The French CAC 40 Index and the German DAX Index closed up by 1 percent and 0.8 percent, respectively. The U.K.'s FTSE 100 Index inched higher, finishing just above the unchanged mark.
Crude oil moved slightly higher on Thursday as some encouraging economic data boosted hopes of a speedier economic recovery. Light sweet crude settled at US$71.37, up 34 cents on the session. Prices traded as high as US$71.75 and as low as US$70.22 in a choppy session.
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