Stocks Rebound, Dollar Dives
TOKYO (AP) _ Share prices recovered from an early plunge to close higher Tuesday while the dollar dropped sharply against the Japanese yen.
The 225-issue Nikkei Stock Average closed at 23,907.42, up 141.96 points, or 0.60 percent, from Monday’s close.
The dollar closed at 138.38 yen, down 1.39 yen from Monday’s close of 139.77 yen. After opening at 139.03 yen, it ranged between 138.70 yen and 139.05 yen.
In bond dealings, the price of the benchmark No. 129 10-year Japanese government bonds rose to 97.65 points as of 3 p.m., up from their 97.49-point finish Monday. Their yield was lower at 6.830 percent from 6.860 percent.
Stocks took a steep dive in early trading as individual investors, reacting to a scandal among the country’s leading brokerage houses, sold stock. The presidents of two major brokerages, Nomura Securities and Nikko Securities, resigned Monday.
On Monday, the index lost 509.62 points, or 2.10 percent, after the two company presidents stepped down amid reports that their firms had arranged loans for an ex-mob boss and had, along with the other two of Japan’s ″Big Four″ brokerages, compensated top clients for market losses.
The Nikkei lost 306.32 points, or 1.29 percent, after the first 15 minutes of trading Tuesday, but firmed later as institutions and foreign investors were encouraged by the strengthening yen and a sense that the news of the resignations may have played itself out, traders said.
″The market is still a little uncertain,″ said Hiroko Charles, a saleswoman at Barclays de Zoete Wedd Securities.
The market probably will continue to be quiet until Thursday, when many companies hold stockholder meetings, she said. Normally quiet stockholders sometimes use such meetings as protest forums.
A trader with Jardine Fleming who spoke on condition of anonymity said, ″The worst may be over, but we’re not out of the woods yet. Traders are showing a lot of self-restraint and are waiting to see how far down the Nikkei will go,″ he said.
Investors are anticipating more bad news when the Finance Ministry announces the results of its investigation of small- and medium-sized brokerages for buyback activity.
Currency trading was quiet while traders watched how the stock market would react to the scandal, said Makoto Aratake, a dealer at the Bank of Tokyo.
In bond dealings, the price of the benchmark No. 129 10-year Japanese government bonds by late morning was even with their 97.49-point Monday finish. Their yield was the same at 6.860 percent.