Key Index Advances for Fourth Day, Dollar Edges Down
TOKYO (AP) _ The Tokyo Stock Exchange’s main index advanced today for the fourth consecutive trading day as investors shrugged off news of a credit union’s troubles. The dollar edged down against the Japanese yen.
The 225-issue Nikkei Stock Average, the market’s key index, gained 28.08 points, or 0.17 percent, closing at 16,677.53. The index now has gained a total of 529.13 points in four trading days.
The Nikkei surged nearly 270 points at one point in the afternoon, but shed some of its gains on profit-taking toward the close, dealers said.
The Tokyo Stock Price Index of all issues listed on the first section was up 8.48 points, or 0.64 percent, to 1,336.10. It had climbed 2.29 points, or 0.17 percent, Friday.
Despite local newspaper reports that a Tokyo credit union, Cosmo Bank Corp., might not be able to meet deposit obligations, there was little negative effect on the stock market. Banking and real estate stocks gained.
Akio Okamura, an equity analyst with Nikko Securities, said investors were encouraged by finance authorities having to publicly address the issue of bad loans held by Japanese banks.
In a meeting Sunday, the central bank, the Finance Ministry and the Tokyo Metropolitan government agreed to lend funds to the credit union to protect depositors.
The financial authorities’ move followed a weekend report in the nationwide newspaper Mainichi Shimbun that Cosmo has about $2.05 billion in non-performing loans.
The bad loans, mostly left over from the burst in the early 1990s of overinflated stock and real estate prices, have been blamed for holding back Japan’s economic recovery by making it harder for banks to lend to new ventures.
The Finance Ministry said in June that problem loans at Japanese financial institutions total $454 billion. Some analysts say the figure is much higher.
Trading volume remained very thin, with many overseas investors taking summer vacations. Major domestic investors also avoided taking aggressive positions.
An estimated 300 million shares changed hands on the first section, down slightly from Friday’s 313 million. Advances outnumbered declines 590 to 427, with 157 issues unchanged.
Meanwhile, the dollar moved narrowly in the absence of major market-moving news, dealers said. The U.S. currency’s firmness for much of the day was based on expectations of a cut in the Japanese central bank’s key lending rate and wariness over possible dollar-buying by the bank to support the U.S. currency.
In late afternoon, the dollar was traded at 88.16 yen, down 0.27 yen from late Friday in Tokyo but up from 88.13 yen in late New York trading Friday. The dollar ranged between 88.10 yen and 88.50 yen during the business day.
The price of the benchmark No. 174 10-year Japanese government bonds closed at 112.68 yen, down 0.14 yen from Friday’s close of 112.82 yen. The yield rose to 2.845 percent from 2.830 percent.