Monday February 9, 06:53 AM
Nikkei falls as bank worry weighs, Nomura dives
By Elaine Lies
TOKYO, Feb 9 (Reuters) - Japan's Nikkei (news) stock average lost
1.3 percent on Monday as a stronger yen pared exporters' gains,
while bank shares fell as
worry grew about a U.S. bank bailout
plan after its announcement was postponed.
Nomura Holdings Inc (N33.SI - news) tumbled 14.3 percent after the
brokerage, Japan's biggest, said it would raise up to $3.3
billion in its first issue of common shares in 20 years to
replenish a capital base hit by its acquisition of parts of
failed investment bank Lehman Brothers (NYSE: LEH - news) .
But machinery shares such as Komatsu Ltd (Berlin: KOM1.BE - news) kept gains
made after data showed Japan's core machinery orders fell 1.7
percent in December from the previous month, much less than
expected and as hopes remained strong that China's economy may be
poised to recover.
Announcement of the keenly awaited U.S. bank rescue plan was
pushed back to Tuesday from Monday to give Congress a chance to
focus on the stimulus package, making wary investors reluctant to
hold onto shares.
Market players said hopes for the U.S. economic steps had
helped push up the market, but uncertainty over the plan's
development capped further gains and led to selling once positive
sentiment from Wall Street's Friday rise played out.
'Until the bank plan's out, nobody can really buy. There's
just too much that's unknown, and with Japan closed for a holiday
on Wednesday, the market won't have a chance to respond,' said
Noritsugu Hirakawa, a strategist at Okasan Securities.
'As for how the markets will respond to the bank plan, it
really depends on whether it's something that can be carried out
or not. If it doesn't satisfy expectations, there's the chance
the market could really fall.'
The benchmark Nikkei shed 107.59 points to 7,969.03
after earlier rising more than 2 percent to a one-week high. The
broader Topix fell 1.5 percent to 778.90.
'The earlier rises on expectations were just too fast. They
can't last,' said Nagayuki Yamagishi, a strategist at Mitsubishi
UFJ Securities.
U.S. Treasury Secretary Timothy Geithner will outline the
Obama administration's financial stability plan in a speech at 11
a.m. EST (1600 GMT) on Tuesday, the Treasury Department said.
The keenly awaited bank rescue plan and economic stimulus
package are key parts of President Barack Obama's strategy for
tackling the country's deepest financial crisis since the Great
Depression.
'The market is already trading on a possible fall in U.S.
stock markets later today,' said Katsuhiko Kodama, senior
strategist at Toyo Securities.
The dollar fell back against the yen after earlier rising to
92.42 yen on trading platform EBS, its highest since early
January, and by midafternoon was trading at around 91.01, down
roughly 0.9 percent.
Investors dislike a strong yen as it eats into exporter
profits when repatriated.
CHINA HOPES STILL SHINE
Though exporters trimmed and in some cases erased gains,
machinery shares managed to hang onto some of theirs and helped
keep the overall market supported as hopes remained strong that
China's economy may be about to turn the corner.
Chinese data out last week that showed a better than expected
January purchasing managers' index, and a surge in bank
lending due to government pressure on banks, triggered a
week-long rally in Chinese shares.
'The hopes for the United States are really just that at this
point, hopes. The hope for China is based on real numbers, and
this will help support Tokyo shares,' said Okasan's Hirakawa.
Komatsu Ltd, the world's No.2 maker of construction
machinery, climbed 2.6 percent to 1,058 yen and Hitachi
Construction rose 3.3 percent to 1,111 yen. Kubota Corp (Frankfurt: KUO.F - news) gained 1.4 percent to 517 yen.
Canon Inc (Berlin: CNN1.BE - news) erased nearly all its earlier gains and
was up a mere 0.2 percent at 2,565 yen, while Panasonic Corp fell 0.7 percent to 1,120 yen.
But Toyota Motor Corp gained 3.2 percent to 3,190
yen despite forecasting a far bigger full-year loss than it
flagged several weeks ago.
Nomura lost 14.3 percent to 490 yen. Nomura's capital has
been depleted by soured investments and costs related to its
acquisition of the Asian, European and Middle East operations of
Lehman Brothers last year.
Other financials also sank in afternoon trade, with No.3 bank
Sumitomo Mitsui Financial Group down 3.7 percent to
3,380 yen and Mizuho Financial Group falling 3.1 percent
to 219 yen.
Trade was moderate on the Tokyo exchange's first section,
with 1.9 billion shares changing hands, compared with last week's
daily average of 2.1 billion.
Declining stocks outpaced advancing ones by nearly 5 to 1.
(Additional reporting by Satomi Noguchi; Editing by Brent
Kininmont)
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