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Japan’s LDP set to return to power

Dec 142012
 

Japan’s former prime minister Shinzo Abe could return his Liberal Democratic Party (LDP) to power as opinion polls suggest he is poised to win Sunday’s election.

The polls by the Asahi, Yomiuri and Nikkei newspapers on Friday forecast that the LDP, which led Japan for decades until 2009, was headed for a hefty majority in the powerful, 480-seat lower house of parliament.

The LDP and its smaller ally, the New Komeito party, are projected to win two-thirds majority needed to break through a policy deadlock that has plagued the world’s third biggest economy since 2007.

The surveys showed that Prime Minister Yoshihiko Noda’s Democratic Party of Japan (DPJ), which came to power three years ago,  could win fewer than 70 seats.

That would be its worst showing since its founding in 1998, the Nikkei said.

“All the candidates are speaking out ahead of the election, but I’m not so sure they’ll carry out any of their promises. I’m hopeful about the new parties, but I also wonder if I should trust one of the older parties,” Hiroko Takahashi, a 51-year-old part-time worker from Machida, west of Tokyo, told the Associated Press news agency.

Tomohiko Taniguchi, professor of politics at Keio University, speaking to Al Jazeera from Tokyo, said “people are feeling very much insecure about two things: economic job security and nuclear security … on top of that, national security”.

These insecurities, especially national security fears, are very rare in Japan, said Taniguchi.

The public is frustrated by DPJ leaders’ failure to carry out promises, including government subsidies for children, eradication of wasteful public spending and getting US military bases off Okinawa, the tiny southern island that holds the majority of US troops.

The new right-leaning Japan Restoration Party, created by popular Osaka Mayor Toru Hashimoto and now led by outspoken nationalist Shintaro Ishihara, was struggling and might win fewer than 50 seats, the Asahi newspaper showed.

If the LDP and the New Komeito control two-thirds of the lower house they could enact legislation even if it is rejected by the upper chamber, where they currently lack a majority.

However, if Abe’s party is successful, it will still face tough challenges in the coming months, Taniguchi said.

“His party has to prove to the nation that they can deliver on the economic front”, ahead of another round of elections in July.

Since 2007, no ruling bloc has had a majority in the upper house, which can block bills other than treaties and the budget.

The election comes at time when Japan, the world’s third-largest economy, is grappling with its fourth recession since 2000.

Business sentiment worsened for a second straight quarter in the three months to December and will barely improve next year, a central bank survey showed on Friday.

The surveys showed  between 30 per cent and nearly 50 per cent of voters were undecided just days before the election.

Experts said that was unlikely to affect the general trend, although turnout will probably fall below the 69.28 per cent seen in the last lower house election in 2009.

A fragmentation of the political landscape has contributed indecision, resulting in a dozen parties, some of them just weeks old, contesting the election, and confusion over policy differences between the main contenders.

“Unlike the past two [lower house] elections, the main points of contention are not so clear and in that sense, it is hard for voters to understand,” said Yukio Maeda, a political science professor at the University of Tokyo.

“But if there is no huge news, bad or good, in the next few days, there is unlikely to be a shift that is beneficial or detrimental to any particular party,” he said.

Japan prepares for N Korean missile launch

Dec 032012
 

Japan has begun deploying a surface-to-air missile defence system and is putting its armed forces on standby in advance of a planned North Korean missile launch this month, reports and officials say.

The Japanese public broadcaster NHK reported that a naval vessel carrying PAC-3 (Patriot Advanced Capability-3) ballistic missiles left a western Japan naval base on Monday, headed for the country’s southern Okinawa island chain.

North Korea announced on Saturday that it would launch a rocket between December 10 and 22 – its second long-range rocket launch this year after a much-hyped but botched attempt in April.

Satoshi Morimoto, Japan’s defence minister, ordered the military on Saturday to prepare for the rocket launch, with a defence ministry spokesman telling AFP news agency that “our ground, marine, and air forces are now preparing to deploy troops in Okinawa”, which the rocket may fly over.

Japan is also planning to deploy Aegis warships in neighbouring waters, the Yomiuri Shimbun and other Japanese media reported on Monday.

Officials are preparing to issue an advance order as soon as Friday to shoot down the rocket if it looks set to fall on Japanese territory, after an emergency meeting chaired by Yoshihiko Noda, prime minister, the Nikkei business daily reported.

In April, Japan ordered missile-defence preparations, including placing one of its PAC-3 systems next to the defence ministry building in central Tokyo in response to the earlier North Korean rocket-launch attempt.

Military preparations were also made in 2009 in advance of another attempt.

Co-operation urged

Noda on Monday called for close co-operation with the US, China, South Korea and Russia in preparation for the planned launch, which has drawn international condemnation.

“I have ordered cabinet ministers to gather and analyse information closely with each other and as we closely collaborate with related countries,” he was quoted by Dow Jones Newswires as saying.

North Korea has reportedly notified neighbours, including Japan, of the trajectory of the planned rocket launch.

It would be North Korea’s second launch attempt under leader Kim Jong-un, who took power following his father Kim Jong-il’s death nearly a year ago.

A spokesman for North Korea’s Korean Committee for Space Technology said scientists have “analysed the mistakes” made in the failed launch and improved the precision of its Unha rocket and Kwangmyongsong
satellite, according to the official Korean Central News Agency.

The statement said the launch was a request of late leader Kim Jong-il. He died on December 17, 2011, and North Koreans are expected to mark that date this year with some fanfare.

The space agency said the rocket would be mounted with a polar-orbiting Earth observation satellite, and maintained its right to develop a peaceful space programme.

Asian markets flat as Barack Obama wins second term

Nov 072012
 

Asian markets were little changed as President Barack Obama was re-elected to a second term.

There are concerns whether Mr Obama and a Republican-dominated Congress will be able to negotiate a way to avoid the so-called fiscal cliff.

The cliff will see nearly $600bn (£375bn) of tax increases and spending cuts hit the US economy in January.

Japan’s Nikkei 225 index ended the day flat, South Korea’s Kospi rose 0.5% and Australia’s ASX 200 gained 0.8%.

The fear is that the tax increases and spending cuts that could be enacted if there is no agreement over deficit reduction may derail a fragile US economic recovery, and in a worst case scenario even push the economy into a recession.

“We head into the fiscal cliff, trying to find compromise where it wasn’t possible before,” said Rob Ryan, director of markets strategy, Asia-Pacific for Royal Bank of Scotland in Singapore.

Broader concerns

The spending cuts and increased taxes are not the only concern among investors.

The US economy has been battling various other issues, not least the high levels of unemployment in the country, which have dented consumer sentiment and impacted growth.

Despite encouraging jobless numbers last week, unemployment continues to hover close to 8%.

There are concerns amongst some analysts that the jobs market may not improve anytime soon and that the recovery in the US will remain weak.

That does does not bode well for Asian economies as they rely heavily on US demand for exports and overall growth.

Global uncertainties

Investors have also been wary of the developments in the eurozone, where the Greek Parliament is set to vote on further budget cuts on Wednesday.

The parliament will vote on 13.5bn euros ($17.3bn; £10.5bn) of spending cuts, which include tax increases and cuts to pensions.

These cuts are key to determining whether Greece can get the next 31.5bn euro tranche of its European and International Monetary Fund rescue package.

Greece has warned that without this money, which will be used largely to recapitalise the country’s banks, it will be bankrupt by the middle of the month.

However, there have been protests in Greece against the proposed cuts.

Analysts said that there were fears that it may take some time before Greece is given the money.

“With Greece there are always a number of stages with any vote. It is a prolonged process to reach any conclusion,” said Justin Harper of IG Markets.

These concerns saw investors ditch riskier assets in favour of relatively safer ones.

Spot gold rose 0.5% to a one-week high of $1,724.21 per ounce in Asian trade, reversing a 0.6% drop earlier in the day.

Meanwhile, the Japanese currency, a traditional safe-haven asset, rose to as high as 79.81 yen against the US dollar from its four-month low of 80.68 yen.

World markets tank over eurozone worries

Jul 242012
 

Stocks have taken a battering while the euro slid to a two-year low against the dollar as fears over Europe’s debt crisis returned to haunt markets.

The euro fell to a near 12-year low against the yen on Monday. The US Dow Jones industrial average was down 1.1 per cent and the broader S&P 500 index fell by 1.3 per cent.

The catalyst to the day’s dramatic falls was the sharp increase in the yield on Spain’s benchmark 10-year bond to well above seven per cent. If it remains around that level, investors believe the eurozone’s fourth-largest economy will likely need a financial rescue like Greece, Ireland and Portugal.

Spain is the epicentre of the current bout of fears, with investors increasingly concerned that the country will not be able to turn its public finances around without outside help.

Greece remains in the spotlight with investors increasingly skeptical about its future within the 17-country eurozone.

Spain’s 10-year borrowing rate rose 0.21 percentage points to close at 7.43 per cent, having traded as high as 7.51 per cent its highest level since the euro was established in 1999.

“Those levels indicate that Spain may soon struggle to fund itself in the market and therefore unless some positive action is taken, the country will need a full bailout,” said Gary Jenkins, managing director of Swordfish Research.

Eurozone fears

Coupled with worries that the financial firewall Europe has built up to deal with its debt crisis is insufficient and growing concerns of the financial health of regions within Spain, markets have started the week on a sour note.

In Europe, the FTSE 100 index of leading British shares closed down 2.1per cent at 5,533.87 while Germany’s DAX fell 3.2 per cent to 6,419.33. The CAC-40 in France lost 2.9 per cent at 3,101.53.

While markets were tanking, Spain and Italy announced temporary bans on the short-selling of stocks whereby investors are prohibited from selling stocks they don’t already own.

The decision by the Spanish regulator to ban the practice for three months helped contain the fallout on the Madrid exchange but did little to encourage traders elsewhere. Italy’s FTSE MIB also retraced losses after the country’s regulator reintroduced a ban on the short-selling of financial stocks for this week.

Madrid’s IBEX closed down 1.1 per cent and Milan’s FTSE MIB 2.8 per cent. Andrew Wilkinson, chief economic strategist at Miller Tabak & Co, said the price action across Europe since the Spanish ban was announced indicates that some investors were caught on the hop, and specifically had to unwind certain German positions in response.

“The DAX fell by a further 1.7 per cent from its position at the time of the announcement,” Wilkinson said.

Though Spain is at the forefront of concerns at the moment, investors are worried that Italy will also struggle with its debts. Its 10-year yield rose 0.25 percentage points to 6.32 per cent.

Global impact

The wave of selling was not just confined to Europe. In the US, the Dow Jones industrial average was down 1.1 per cent at 12,680.33 while the broader S&P 500 index fell 1.3 per cent to 1,344.87.

The euro was roughly flat at $1.2119 after earlier falling to $1.2066, its lowest level since June 2010. The euro has also fallen to a near 12-year low against the yen.

A forecast from a Chinese central bank adviser that China’s economy could wane further in the third quarter also deepened concerns about the global slowdown. China’s economic growth slowed to a three-year low of 7.6 per cent in the second quarter.

Japan’s Nikkei fell 1.9 per cent to 8,508.32 and Hong Kong’s Hang Seng dived 3 per cent to 19,053.47. China’s Shanghai Composite Index shed 1.3 per cent to 2,141.40.

South Korea’s Kospi dropped 1.8 per cent to 1,789.44. Oil prices took a hit, too, as investors fretted over Europe’s debt woes and the global economy, with the benchmark New York rate down $2.69 a barrel at $88.38.

Euro hits 11-year low against yen amid Spain debt woes

Jul 232012
 

The euro has fallen to an 11-year low against the Japanese yen amid fears that debt problems in Spain are worsening.

The euro fell to 94.37 yen in Asian trade, its lowest level since November 2000.

On Friday, Spain’s Valencia region requested the central government for financial help from a new rescue fund.

That resulted in Madrid’s borrowing costs shooting up to levels regarded as unsustainable in the long run.

The yield on Spanish 10-year bonds shot up a quarter percentage point to 7.28% and Spain’s Ibex stock index tumbled almost 6%, its worst fall in two years.

Analysts said the developments in Spain had raised fears that the eurozone debt crisis was worsening and spreading to the region’s biggest economies.

“The fear now is that given its debt woes, Spain may eventually need a bailout from the International Monetary Fund or the eurozone’s rescue fund,” Justin Harper of IG Markets.

“That is driving investors away from the euro to other relatively safer-haven assets.”

The euro also fell against the US dollar, slipping to $1.2122. It also dropped against the Australian and New Zealand currencies in Asian trade.

Broader falls

Asian stock markets also fell on Monday amid fears that the ongoing debt problems in eurozone will hurt the region’s growth.

Japan’s Nikkei 225 index fell 1.9%, South Korea’s Kospi dropped 1.8% and Australia’s ASX 200 index shed 1.7%.

The eurozone is a key market for Asian exports and there are concerns that demand from the region may decline in the near term.

At the same time, a weaker euro has also added to the woes of Asian exporters, as it makes their goods more expensive for buyers from the region.

Analysts said that investors were concerned that the crisis may spread even more.

“Just as the eurozone’s problems had appeared to calm down, uncertainty rears its head again,” said Masayuki Otani, chief market analyst at Securities Japan.

“It’s also not only in Spain where regional banks are in trouble, they’re also weak in Italy and other countries.”

Japan’s Nikkei stock average fell 0.1%

Oct 192009
 

nikkei-houseJapan’s Nikkei stock average fell 0.1 per cent on Monday, with exporters such as Kyocera Corp down after disappointing US corporate
earnings robbed the market of upward momentum sparked by earlier upbeat results.

But the benchmark pared most of its losses in late trade as short-covering emerged and other Asian share markets rose, while struggling Japan Airlines Corp climbed 10 per cent after losing 26 per cent of its value last week, staging what market players said was a rebound on a sense the stock had fallen too far.

The Sankei newspaper reported on Sunday that the Japanese government task force set up to keep JAL afloat has decided to tap a state-backed institution tasked with revitalising struggling companies.
“What we’re seeing is just profit-taking, with Wall Street’s Friday fall providing the excuse, along with a sense that the market may have risen too far, too fast.”

The benchmark Nikkei lost 9.21 points to 10,248.35 after earlier falling as much as 1.3 per cent. The broader Topix rose 0.4 per cent to 904.29. “Basically activity today is dominated by short-term traders, who are buying on dips after selling at the highs. The market is also paring its losses in tandem with movements in the rest of Asia,” said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.

A broad range of exporters lost ground, with Kyocera Corp down 0.9 per cent to 8,010 yen and Honda Motor Co down 0.5 per cent to 2,765 yen.

Fast Retailing, owner of the Uniqlo casual-clothing chain, fell 3 per cent to 14,860 yen after JP Morgan cut its rating on the stock to “underweight” from “neutral,” citing its recent sharp gains.

“The share price has risen 45 per cent from its recent low in less than one month, so we think most of the good news is probably now discounted,” JP Morgan analyst Chiaki Hirota wrote in a note.

But JAL rose to 112 yen, though market players warned these gains might well be temporary in the face of the company’s challenges.
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Asian shares hovered near 14-month highs

Oct 192009
 

equity-negliAsian shares hovered near 14-month highs on Monday, shaking off an early dip after disappointing earnings from US corporate bellwethers such as General Electric Co spurred some investors to take profits.

European shares were set for a slight rise at the start, with futures on the Dow Jones Euro Stoxx 50 up 0.3 per cent in early trade and tracking gains in S&P 500 futures.

Oil prices pushed up to a one-year high of $79.05, giving a boost to energy-related shares and helping stocks around the region recover from early selling of financial shares.

South Korean technology exporters such as Samsung Electronics also climbed on a weaker won, helping lift the KOSPI 0.5 per cent.

The dollar edged up, thanks mainly to a retreat in the euro as European policymakers voiced some concerns that the single currency’s surge is approaching levels that would damage the euro zone’s recovery. Eurogroup Chairman Jean-Claude Juncker said he was concerned about a continuous euro rise.

But the US currency’s gains were slight, and activity was limited as investors focused on what the next batch of quarterly earnings will say about how companies are managing the recovery from the deepest global recession in decades.

Some 135 of the companies in the S&P 500 will report quarterly results this week, with the battered financial sector expected to post the highest growth rate, according to Thomson Reuters data.

“What we’re seeing is just profit-taking, with Wall Street’s Friday fall providing the excuse, along with a sense that the market may have risen too far, too fast,” said Noritsugu Hirakawa, a strategist at Okasan Securities in Tokyo.

After rallying strongly for more than seven months, stocks have lost some momentum in recent weeks on fears that corporate earnings expectations are far too optimistic given the still frail US economy.

The S&P 500 fell 0.8 per cent on Friday after results from GE and Bank of America Corp highlighted that the road to recovery will be bumpy.

The benchmark MSCI index of Asia-Pacific shares outside Japan was unchanged and not far from its 14-month peak hit on Thursday. So far this year, the index is up 65 per cent.

Asia ex-Japan shares remain among the top performers in the world as the region has powered out of the recession the strongest, while its major companies have benefitted from a pick-up in demand for electronics.

The Thomson Reuters index of Asia ex-Japan shares slipped 0.2 per cent, while Japan’s Nikkei average edged down 0.2 per cent.
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World stocks rally,

Oct 192009
 

usstockWorld stocks kicked off the week on a positive note on Monday and the dollar dipped against major currencies as investors recovered from recent disappointing US company earnings reports.

Oil was at a 12-month high around $79 a barrel. MSCI’s benchmark all-country world stock index was up half a per cent, not far from last week’s 12-month highs. Emerging market shares gained three-quarters of a per cent.

Investors were rattled on Friday by disappointing results from General Electric and Bank of America.

Texas Instruments and Apple were due to report later on Monday.

Research shows that with around a quarter of companies in the US S&P 500 index having reported, 79 per cent have beaten analysts expectations.

In a typical quarter, the percentage is 61 per cent. With this as a background, the general mood of investors has been upbeat about earnings, raising expectations to the point where some positive results have actually disappointed.

“There is a positive attitude and again we are looking at more corporate results coming through. There are high expectations for Apple, the company has had a fantastic corporate story over the past few years,” said Justin Urquhart Stewart, director at Seven Investment Management.

The pan-European FTSEurofirst 300 index was up about 1 per cent.

Earlier, Japan’s Nikkei stock average fell 0.2 per cent, But the benchmark pared the bulk of its losses in late trade and most other Asian share markets rose.

The euro edged up towards a 14-month high against the dollar, which remained under the selling pressure that has accompanied the global stock market rally.

It was dangling just below the psychologically key $1.50 level at $1.493.

“The trend clearly is for a weaker dollar due to a lack of interest rate support for the US currency, the US budget deficit and of reserve bank diversification flows into other currencies, like the euro,” said Marcus Hettinger, global currency strategist at Credit Suisse in Zurich.

Euro zone government bond prices eased. The 10-year Bund yield gained 3 basis points to 3.316 per cent, within striking distance of a three-week high of 3.327 per cent set last Friday.
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Asian stocks fall,

Oct 162009
 

share-market-india Asian stocks mostly edged lower Friday despite the Dow Jones industrials closing above 10,000 points for a second day as a monthslong rally lost steam.

Losses were muted, however, with oil’s rise above $78 a barrel helping energy stocks. Thailand’s market rebounded after falling 7 per cent over two days amid panic about the health of 81-year-old King Bhumibol Adulyadej.

Japan’s benchmark Nikkei 225 stock average was down 13.45, or 0.1 per cent, at 10,225.20 and South Korea’s Kospi dropped 7.64, or 0.5 per cent, to 1,651.34. Australia’s benchmark dropped 0.4 percent while Hong Kong’s Hang Seng advanced 26.63, or 0.1 per cent, to 22,025.71.

Mark Tan, who helps manage the equivalent of about $10 billion of equities and bonds at UOB Asset Management in Singapore, said regional bourses were “taking a breather” for now, but were likely to resume gains on positive earnings and economic growth prospects.

Elsewhere, China’s Shanghai index fell 0.5 per cent, Singapore’s market lost 0.3 per cent and Taiwan was flat.

Thailand’s benchmark jumped 1.9 per cent. The previous day it closed down 5.3 per cent after tumbling more than 8 per cent as the king’s lengthy hospitalization raised fears of a power vacuum in this divided Asian nation.

In New York on Thursday, the Dow rose 47.08, or 0.5 per cent, to 10,062.94, its highest close since Oct 3 last year and second straight finish above 10,000. Broader indices also gained.

US stocks gained as a rise in the price of crude oil boosted energy shares and economic data showing that the number of newly laid-off workers filing claims for unemployment insurance fell to its lowest level since January. That helped to offset disappointment about Citigroup’s earnings.

Oil prices continued a weeklong rally, jumping above $78 a barrel, after US gasoline inventories unexpectedly fell.

Benchmark crude for November delivery rose as much as 59 cents to $78.17 before slipping back below $78. The contract rose $2.40 to settle at $77.58 on Thursday.

In currencies, the euro fell to $1.4923 from $1.4942. The dollar rose to 90.88 yen from 90.56 yen.
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Nikkei crawls to 3-wk closing high

Oct 162009
 

nikkei-houseJapan’s Nikkei stock average clawed up 0.2 per cent on Friday to a three-week closing high as gains in retailers and drug firms narrowly offset losses in banks and Japan Airlines, which tumbled for a second straight day.

Cash-strapped JAL fell over 11 per cent, taking its losses this week to some 26 per cent, with concerns about the size and content of a rescue package also contributing to pressure on banking shares.

Sources told the news agency earlier this week that JAL has asked its creditors for a total of 600 billion yen in financial aid as part of a restructuring plan, including debt forgiveness and debt-for-equity swaps.

“There’s increasing concern about the future of the company and whether it’s heading for a GM-style bankruptcy or not,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

Tech shares slid in afternoon trade on profit-taking, pushing the Nikkei briefly into negative territory, though some in the market said the benchmark was showing surprising resilience.

“I think expectations of good results for Japanese companies have enabled the Nikkei to do unexpectedly well this week considering all the things that it has faced, including the yen’s strength that we saw earlier this week,” said Tomomi Yamashita, a fund manager at Shinkin Asset Management.

The benchmark Nikkei edged up 18.91 points to 10,257.56, its highest close since Sept 25. The broader Topix, which is less tech-heavy, fell 0.4
per cent to 900.95.

The Nikkei gained 2.4 per cent on the week for its second straight week of rises.

Others attributed the market’s strength to a sense that the gradual improvement in global share markets would inevitably buoy Tokyo, which is not rising as fast as other markets.

“The pace of economic recovery seems to be better than expected, as shown by strong US tech earnings, and global stock markets are trending upwards,” said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.

But by late afternoon the market had largely run out of energy, with investors reluctant to buy ahead of the weekend and amid concerns about whether Wall Street would hang onto the gains that took the Dow over 10,000 this week for the first time in a year.

JAL WOES JAL was the biggest drag on the Nikkei 225, losing 11.4 per cent to 101 yen. Japan’s transport minister said the draft plan for JAL’s restructuring was progressing smoothly and again pledged government support.

In addition to worries about JAL, banks also succumbed to profit-taking after results from Goldman Sachs Group and Citigroup Inc failed to match the high standards set by JPMorgan Chase & Co and worries about a loan moratorium proposed by Banking Minister Shizuka Kamei.

Fitch Ratings commented that concerns may emerge over the soundness of Japanese banking institutions if debt-relief programmes are put in place, noting that it was concerned about the ultimate impact on banks’ asset quality and profitability.

Top lender Mitsubishi UFJ Financial Group lost 3.1 per cent to 470 yen, No. 3 bank Sumitomo Mitsui Financial Group fell 1.9 per cent to 3,190 yen, and Mizuho Financial Group, Japan’s second-largest bank, lost 1.2 per cent to 172 yen. All were off earlier lows.

Tech shares slid on profit-taking after gains last week, with Tokyo Electron Ltd losing 3.3 per cent to 5,610 yen and Advantest, a maker of chip testing devices, down 1.4 per cent to 2,465 yen.

But a broad array of defensive shares such as retailers and drug firms gained ground, with Fast Retailing, operator of the casual clothing chain Uniqlo, climbing 5.5 per cent to 15,320 yen. Sony Corp gained 1.9 per cent to 2,650 yen after Citigroup Global Markets analyst Kota Ezawa upgraded his rating to “buy” from “hold” and raised his target price by 200 yen to 3,400 yen, saying that profitability in the PlayStation 3 game console looks set to recover and an asset-light strategy would improve business flexibility.

Trade was thin, with 2 billion shares changing hands on the Tokyo exchange’s first section compared with last week’s daily average of 2.1 billion.

Declining shares outnumbered advancing ones by 933 to 607.
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