Stocks Bounce Back, Dollar Lower
TOKYO (AP) _ The Tokyo Stock Exchange’s key index rebounded slightly in continued thin trading today, one day after diving below 16,000 points for the first time in 5 1/2 years. The dollar fell against the yen.
The 225-issue Nikkei Stock Average gained 185.77 points, or 1.17 percent, closing at 16,106.99. On Monday, the Nikkei fell below 16,000 for the first time since October 1986, ending at 15,921.22, down 598.65 points, or 3.62 percent.
The Tokyo Stock Price Index of all issues listed on the first section, which lost 27.09 points, or 2.14 percent, the previous day, rose 7.03 points, or 0.56 percent, to 1,247.21.
An estimated 220 million shares changed hands, down from Monday’s 243 million. Declining issues outnumbered advances 469 to 448, with 177 issues unchanged.
Traders said the market remained weak as investors awaited government action to revive the faltering economy. The Nikkei rose above 16,000 early in the session, fell back on small-lot selling and then recovered again.
″It’s still bearish, as its subdued trading volume showed,″ said Toshiki Shimazaki, general manager of the business promotion division at Dai-Ichi Securities.
Shimazaki said the Nikkei bounced back in the afternoon following a rumor attributed to government sources that the government is considering $55.5 billion in supplementary spending to prop up the sluggish economy.
Hisashi Koizumi, an analyst with Kankaku Securities, said the market already had been expecting some supplementary budget spending, expected this autumn.
The major economic newspaper Nihon Keizai said the governing Liberal Democratic Party would draft the framework of pump-priming measures next week before Prime Minister Kiichi Miyazawa’s departure for a summit meeting of major industrialized nations in Germany.
Many Japanese manufacturing firms have said they were cutting new capital investment because of the slowing economy.
Also discouraging investors was a Bank of Japan report late Monday that the nation’s broad money supply grew at a historic low rate of 1.1 percent last month from the year earlier.
Meanwhile, the dollar closed at 126.96 yen, down 0.51 yen from Monday’s close and also below its overnight New York finish of 127.15 yen.
After opening at 126.97 yen, it ranged between 126.92 yen and 127.10 yen. Spot trading totaled $3.98 billion, down from Monday’s $4.03 billion.
Shigeru Murata, a dealer with Sakura Bank said that despite the stock market’s rebound, many traders still consider it difficult to buy the yen while the government’s stimulative measures remain unclear.
The benchmark No. 129 10-year Japanese government bonds closed at 105.58 points, down from Monday’s 105.67-point finish. Their yield rose to 5.375 percent from 5.360 percent.