Stocks Rise for Second Day, Dollar Falls
TOKYO (AP) _ Tokyo share prices surged today as investors turned optimistic again about prospects for government rescue measures for Japan’s slumping economy. The dollar fell sharply against the yen.
The Nikkei Stock Average of 225 selected issues climbed 489.85 points, or 2.63 percent, closing at 19,138.21. On Tuesday, the Nikkei had gained 295.12 points, or 1.61 percent, to 18,648.36.
″People now are convinced that both the ruling coalition and the opposition parties will be in accord on a new economic package before the Feb. 11 summit meeting,″ said Takashi Matsumoto, a strategist with Okasan Securities.
Prime Minister Morihiro Hosokawa is to visit Washington then for talks with President Clinton, expected to focus on the trade imbalance between Japan and the United States, which totaled $50 billion last year.
Government officials have hinted about a large-scale income tax cut and other stimulative measures, but have not said when they would be announced.
Last Friday, the upper house of Japan’s Parliament rejected a package of political reform legislation on which Hosokawa had staked his future. Amid fears that efforts to save the package would delay economic measures, the Nikkei average plunged almost 5 percent, or 954.19 points, in frenzied trading Monday.
It was the Nikkei’s largest single-day dive since a 1,357.61-point fall on Aug. 19, 1991.
Discussions on the political reform bills were continuing Wednesday, but investors were expecting that the government would have to shift its full attention to the economy in a new parliamentary session opening next Monday.
The Tokyo Stock Price Index of all issues listed on the first section was up 30.94 points, or 2.04 percent, to 1,550.32. It had climbed 20.32 points, or 1.36 percent, to 1,519.38 the previous day.
An estimated 360 million shares changed hands on the first section, up from Tuesday’s 281 million. Advances outnumbered declines 968 to 114, with 93 issues unchanged.
Meanwhile, the dollar closed at 110.24 yen, down 1.31 yen from Tuesday’s finish and also below its overnight New York close of 111.01 yen.
After opening at 110.68 yen, it ranged between 110.18 yen and 110.75 yen.
Yen buying grew on optimism about an economic rescue package, said Toshihiro Nagata, deputy general manager with the Treasury Department at Sanwa Bank.
Other dealers said the dollar was sold aggressively on reports that U.S. economist C. Fred Bergsten will call for a stronger yen against the dollar.
A stronger yen has been proposed to help reduce Japan’s large trade surpluses by making Japanese goods more expensive abroad and foreign goods cheaper in japan.
A Japanese research institute’s New York branch late Tuesday released a report forecasting that Bergsten, considered close to the U.S. administration, believes the dollar’s appropriate range should be 90.00 yen to 110.00 yen.
The research institute said Bergsten likely will announce his view on Friday at a world economic forum in Davos, Switzerland.
The price of the benchmark No. 157 Japanese government bonds closed at 107.35 yen, down 0.80 yen from Tuesday’s close. Their yield rose by 0.105 percentage point to 3.460 percent.