Japan Stocks Jump on Rumor
TOKYO (AP) _ Tokyo share prices jumped today on expectations that the government may come up with a package of stimulative measures to bolster Japan’s economy next week. The dollar fell against the yen.
The benchmark Nikkei Stock Average of 225 selected issues finished the day’s trading at 17,707.49, up 376.12 points, or 2.17 percent. On Wednesday, the Nikkei had gained 24.98 points, or 0.14 percent.
Stocks were initially lower following an overnight fall on Wall Street and amid lingering concerns about Japan’s economic outlook.
But a strong rebound in futures prices later in day led investors to buy blue chips in banking, auto and high-technology sectors, moving the market’s key index into positive territory.
Traders said the rally was also supported by unconfirmed rumors that Noboru Takehista, a former Japanese prime minister and a senior ruling party member, has proposed the government cut income taxes to revitalize the sluggish economy.
``It’s a rumor-driven market and if anything, it may be lip-service″ by the former prime minister, said Yoshihito Sato, general manager of the management planning group with Matsui Securities.
Prime Minister Ryutaro Hashimoto and other government officials have repeatedly said the government could not afford to cut taxes when the country is trying to cut its huge fiscal deficits.
Despite record-low interest rates, Japan’s economy has remained sluggish over the past seven years.
Trading was light as many investors awaited the release of the Liberal Democratic Party’s economic package expected on Oct. 20. An estimated 380 million shares changed hands on the first section, down from Wednesday’s 412 million shares. Advances outnumbered declines 861 to 239, with 155 shares unchanged.
The broader Tokyo Stock Price Index of all issues listed on the first section was up 23.82 points, or 1.77 percent, to 1,369.19. The TOPIX rose 7.47 points, or 0.56 percent, the previous day.
At late afternoon, the dollar was trading at 120.38 yen, down 1.08 yen from late Wednesday in Tokyo and also below its late New York rate of 121.16 yen overnight. It ranged between 120.30 yen and 121.23 yen in today’s trading.
The dollar declined after the rumors of an income-tax cut prompted investors to sell dollars in favor of yen, traders said. The yen also got a boost following the Tokyo stock market’s surge and a rise in long-term interest rates.
The yield on the benchmark No. 182 10-year Japanese government bond stood at 1.800 percent, up from 1.755 percent Wednesday, driving its price down to 108.31 from 108.65 yen.