Despite Worries Tokyo Shares Rally

Wednesday March 21, 2:28 am Eastern Time
By DIRK BEVERIDGE
AP Business Writer

HONG KONG (AP) -- <font color="#FF0000">A powerful rally in Tokyo </font>stole the show in Asian stock trading on Wednesday, and smaller markets quickly contained their losses in reaction to a smaller-than-expected U.S. interest rate cut.

<font color="#FF0000">Japanese shares surged by around 7.5 percent in the late afternoon amid speculation the government was buying into the market to prop up prices</font> -- after traders shook off early concerns that the latest U.S. rate reduction was not big enough.

Japan's stumbling economy has long been a global worry, but a cut early this week in Japanese interest rates to almost zero plus the announcement of planned measures to reduce bad bank debts helped <font color="#FF0000">push the market sharply higher.</font>

"I think people are taking a bit of a gamble that this is a harbinger of good things ahead,"" said Peter Morgan, chief economist at HSBC Securities in Tokyo. <font color="#FF0000">"I was a bit shocked."</font>

<font color="#FF0000">The 225-issue Nikkei Stock Average had surged by late afternoon to show a gain of 7.49 percent at 13,103.94 points.</font>

Traders around the world were disappointed the U.S. Federal Reserve had cut interest rates by just a half point -- not the three-quarters point many had hoped for -- on Tuesday.

<font color="#FF0000">But despite drops of 2.4 percent by the Dow Jones industrial average and 4.8 percent by the Nasdaq composite index, any damage in Asia came quickly under control.</font>

"Basically the U.S. was disappointing," said Tan Kim Chye, an analyst at the brokerage G.K. Goh in Singapore, where shares had narrowed their red ink to just 0.3 percent by midafternoon.

Tokyo's rally helped pull prices in Seoul slightly higher by the close, with the Kospi index up 0.19 percent after reversing early losses.

Hong Kong's Hang Seng Index was down by 1.2 percent in the afternoon, showing a partial recovery from its morning loss of 2 percent.

Prices in Manila finished with a drop of 1.3 percent.

"Expectations on U.S. rates were not met," said fund manager Edison Yap at Equitable PCI Bank in Manila."But such expectations are dubious, given that the risk of a global economic slowdown has moderated, with the U.S. economy appearing to have bottomed out.""

Taiwan shares closed with a loss of 0.3 percent at 5,623.42 -- and dealers tried to tout weakness in the market as a buying opportunity.

"A lot of investors have sidelined large amounts of cash," said William Moomaw, at Jih Sun Securities in Taipei."And they'll be buying on lows."

Quelle: AP

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Tokyo Stocks Soar More Than 7 Pct.

Wednesday March 21, 2:07 am Eastern Time

TOKYO (AP) -- <font color="#FF0000">Japanese stocks rocketed higher Wednesday amid speculation that the government bought shares to boost the market. </font>The dollar was lower against the yen.

<font color="#FF0000">The benchmark 225-issue Nikkei Stock Average rebounded from a morning sell-off to close up 912.97 points, or 7.49 percent, to 13,103.94. It was the index's seventh largest one-day percentage point gain. </font>On Monday, the average closed down 42.01 points, or 0.34 percent.

The dollar bought 122.92 yen at 3 p.m. (1 a.m. EST), down 0.44 yen from late Monday in Tokyo but above its late New York level of 122.13 yen overnight.

Financial markets in Tokyo were closed Tuesday for a national holiday.

On the stock market, the Nikkei index opened weaker on disappointment that the U.S. Federal Reserve Board decided overnight on a smaller than expected cut in interest rates.

<font color="#FF0000">But stocks rebounded by midmorning, rising steadily throughout the day as talk swept through the market that the government had stepped in to prop up share prices, </font>which last week hit a 16-year low.

<font color="#FF0000">The government often intervenes in the stock market to lift share prices as the March 31 fiscal year-end nears.</font> <font color="#FF0000">The practice is meant to aid debt ridden Japanese banks and companies by limiting their losses on securities holdings.</font> [Anmerkung: gezielte Manipulation!!!]

It was also the first day of trading since the Bank of Japan's move to revive its zero interest rate policy Monday evening, and many investors cheered the central bank's decision as necessary to ward off a recession.

On Tuesday, U.S. stocks finished lower on selling by investors, who were disappointed by a half point interest rate cut by the Federal Reserve. The Fed acted to try to keep the U.S. economy from slipping into negative growth.

On Wall Street, many investors who had hoped for a 0.75 percentage point cut began selling off their stocks, sending the Nasdaq composite index down 93.74 to 1,857.44. The Dow Jones industrial average fell 238.35 to close at 9,720.76.

Lower rates would help the economy by making it less expensive for consumers to borrow money to pay for expensive items such as cars, while giving companies more incentive to purchase new machine tools and other equipment.

<font color="#FF0000">The broader Tokyo Stock Price Index of all issues listed on the first section finished up 75.80 points, or 6.32 percent, to 1,275.41 Wednesday. The TOPIX closed up 2.14 points, or 0.18 percent, on Monday.</font>

In currency dealings, the dollar fell against the yen following the Fed's rate cut and the gains in Japanese shares.

Lower interest rates, which lead to smaller returns on investments such as bonds, usually make a country's currency less attractive to investors.

In other currencies, the euro was traded at 111.72 yen, up from 110.32 yen late Monday in Tokyo.

The yield on the benchmark 10-year Japanese government bond fell to 1.0400 percent from Monday's finish of 1.1400 percent. Its price rose 0.92 point to 103.25.

Quelle: AP

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