Market Rebounds, Dollar Slips
TOKYO (AP) _ The Tokyo Stock Exchange’s main index rebounded moderately today on news that two major Japanese paper makers planned to merge, traders said. The dollar declined against the Japanese yen.
The 225-issue Nikkei Stock Average rose 140.71 points, or 0.85 percent, closing at 16,600.26. In the previous three trading days, it had fallen a total of 298.08 points.
The Tokyo Stock Price Index of all issues listed on the first section gained 2.98 points, or 0.23 percent, to 1,274.13. The index had slipped 16.39 points, or 1.27 percent, the previous day.
An estimated 190 million shares changed hands, up from Tuesday’s 169 million. Declining issues outnumbered advances 548 to 377, with 148 issues unchanged.
″The news of the merger provided a breath of air for the weakening market,″ said Takeshi Shimazaki, general manager for business promotion at Dai-Ichi Securities.
The Tokyo Stock Exchange suspended trading in shares of the two paper companies - Jujo Paper Co. and Sanyo-Kokusaku Pulp Co. - about an hour before the market’s close to verify reports of merger plans.
After the close, executives of the two announced that they planned to merge next April to establish ″a business structure that can compete internationally.″
Japan’s paper industry now faces the worst recession since World War II, with prices falling because of excess paper-manufacturing capacity, the two companies said in a joint statement.
Combined sales of Jujo, Japan’s third largest paper company, and Sanyo- Kokusau, the fifth largest, are expected to total $5.44 billion, becoming the nation’s largest, the economic newspaper Nihon Keizai reported.
Shimazaki said gainers included shares of pharmaceutical companies developing drugs against AIDS as Japan’s semipublic television network planned to broadcast a two-part series on AIDS beginning Thursday.
Meanwhile, the dollar closed at 124.00 yen, down 0.17 yen from Tuesday’s close and also lower than its overnight New York finish of 124.10 yen.
It was the dollar’s lowest close in Tokyo since 123.23 yen on Jan. 23.
After opening at 123.88 yen, it ranged between 123.80 yen and 124.25 yen. Spot trading totaled $7.84 billion, up from Tuesday’s $5.48 billion.
Yoko Shimizu, a dealer with Fuji Bank, said the dollar was bought back for short covering after traders pushed it down to 123.80 yen, where the American currency found support.
″The dollar’s downtrend remains intact, but everyone is watching the outcome of the summit meeting,″ Shimizu said.
Leaders from Germany, Britain, France, Italy, Japan, the United States and Canada were to announce an economic declaration today at the end of their three-day summit in Munich, Germany.
The benchmark No. 129 10-year Japanese government bonds closed at 106.57 points, down from Tuesday’s 106.63-point close. Their yield edged up to 5.200 percent from 5.190 percent.