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Asia stock markets rally as Fed refrains from tapering

Sep 192013
 

Asia stock markets rally as Fed refrains from taperingAsian stocks are rising after the US central bank unexpectedly said it would not scale back its stimulus programme until the economy improves further.

Japan’s Nikkei 225 index rose 1.3%, Hong Kong’s Hang Seng jumped 2% and Australia’s ASX 200 rose to a five-year high after the announcement.

Stock exchanges in mainland China, Taiwan and South Korea were closed for public holidays.

In the US, the three main stock indexes closed at record highs on Wednesday.

Many investors had speculated that the Federal Reserve would begin reducing its $85bn (£54bn) bond-buying plan this month.

But in a statement released after its two-day policy meeting, the Fed said there was no fixed timetable for it to begin scaling back – or “tapering” – its stimulus.

The central bank said it was taking a more cautious stance because of an “elevated” unemployment rate and concerns about the US economic recovery.

“The committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases,” it said.

The Fed also cut its forecast for growth this year to between 2.0% and 2.3%. That compares to a June estimate of between 2.3% and 2.6%.

‘Main beneficiaries’

Gold had its biggest one-day jump in four years, rising by more than 4% to $1,364 per ounce following the Fed decision.

But it is emerging Asian stocks and currencies that have posted the largest gains.

Indonesian stocks have surged as much as 7%, Philippines shares rose 3.6%, and Thailand’s benchmark index gained nearly 2%.

The Malaysian ringgit and Thai baht have both strengthened by nearly 2%.

Analysts said Wednesday’s rally was expected, but added that questions remained over whether the gains were sustainable.

“Emerging markets will be the main beneficiaries, given their sensitivity to the Fed policy, which has been fairly evident,” Kelly Teoh from IG Markets said.

“I don’t think it’s good to continuously have stimulus in the markets. We saw in May – when the Fed first talked about the taper – how violent the sell-off can become.”

“The stimulus masked the underlying growth and structural issues in emerging Asian markets. If you look at the current account deficits you can see that growth has been stalling,” Ms Teoh said.

“But this all just being swept under the carpet now.”

Earlier this year, growing expectations of a Fed tapering sparked a sharp sell-off in emerging markets as investors moved their money out of the country.

The Fed’s programme, which is also known as quantitative easing, meant that large sums of extra money was invested in Asian financial markets because many offered high returns.

Concerns that this would be reduced have caused investors to move their money out of these countries and into other assets.

As a result, emerging market currencies such as the Indian rupee and the Indonesian rupiah saw their values depreciate significantly.

Borrowed tab

Market participants are now turning their eye towards the Fed’s next policy meeting in October.

Ms Teoh said it unlikely that policymakers will pare the stimulus then either.

But she said it was important the Fed ultimately end its asset programme soon because markets are operating on a “borrowed tab”.

“It is quite evident that QE does not help the US labour market. It’s been five years and people are still giving up hope about finding a job. It helps the stock market but it doesn’t trickle down or its very slow.”

David Carbon, chief economist at Singapore bank DBS also believes it is unlikely the Fed will announce a taper at their next meeting in October either.

He said weak employment growth, low inflation, slowing private sector growth and higher long-term interest rates in the US would make the Fed “sit tight”.

“The data are key. And they’re not looking like October at the moment,” he said.

Japan’s economic growth data revised higher

Sep 092013
 

Japan's economic growth data revised higher Japan has revised up its growth data for the April to June quarter, adding to hopes of an economic recovery.

The economy expanded 0.9% during the period, compared to the previous three months. That translates into an annualised growth of 3.8%.

The initial estimate of quarter-on-quarter growth was 0.6%.

Japan has taken aggressive measures in recent months to spur growth in the world’s third-biggest economy, after years of stagnation.

“The moves by Japanese policymakers have fuelled optimism of a recovery, which has seen companies start to invest more,” Martin Schulz of Fujitsu Research Institute told the BBC.

“That is trickling down into the labour market and the real economy. The affect of that is now starting to show in the numbers,” he explained.

The upward revision also comes at a time when the Japanese government is considering raising the rate of sales tax – called consumption tax in Japan.

The rate currently stands at 5% and under government plans that could double to 10% by 2015.

Policymakers have argued that the move is key to cutting Japan’s high public debt, which stands at around 230% of its gross domestic product (GDP) – the highest among industrialised nations.

At the same time the government needs to increase its income to fund rising welfare costs as its population continues to age.

It is estimated that 40% of Japan’s population will be of retirement age by 2060.

But there have been concerns that raising the tax may hurt domestic demand and derail the ongoing economic recovery.

Analysts said the upgrading of growth numbers may make it easier for lawmakers to go ahead with the planned increase.

“Japan’s economic recovery will continue due to strong personal consumption and public works spending,” said Hiroaki Muto, a senior economist with Sumitomo Asset Management in Tokyo.

“The upward revision means that the government can raise the sales tax as scheduled.”

‘Perfect match’

The economy got a further boost over the weekend as Tokyo won the bid to host the 2020 Olympic and Paralympic Games.

Japan will spend an estimated $8bn (£5bn) on refurbishing old stadiums and building new ones.

Analysts say spending and construction activity will further help boost Japan’s economic recovery in the coming years.

Masamichi Adachi, a senior economist at JP Morgan said that an important aspect of winning the bid is “the confidence” derived from winning the competition to host such a big tournament.

“It makes people feel that we have to do more. That kind of sentiment will give a boost to the economy.”

Japan’s Nikkei 225 index jumped more than 2% on Monday, as the Olympic bid win and the upward revision to growth numbers boosted investor sentiment.

Pre-market: Nifty seen opening soft; may test 5750 levels

Jul 042013
 

Pre-market: Nifty seen opening soft; may test 5750 levelsNEW DELHI: The 50-share Nifty index is expected to open soft on Thursday in line with other Asian markets. Tracking the muted momentum, the index is likely to test its crucial support level of 5750 in trade today.

At 07:30 a.m., Nifty India stock futures in Singapore were trading 10 points higher at 5782, indicating a lower opening on the domestic market.

The 50-share Nifty index closed below its crucial support level of 5800 on Wednesday, in line with other global peers. The rise in global crude oil prices and weak rupee weighed on investor sentiments as it impact India’s current account deficit (CAD).

The Nifty is now trading at its support levels i.e. 5750 odd levels which is supported by the gap which was formed on 28th June.

“Any move below this level may attract more panic selling which may drag a Nifty towards 5630/5600 levels also,” said Swati A. Hotkar, Technical Analyst at LKP Advisory.

“Upside resistance is place at 5920 levels and we advise traders to maintain a strict stop loss of 5750 levels for their long position,” she added.

According to analysts, the trend remains on the downside and the Nifty can plunge another 100 points from current levels. The index has a strong support at 5550-5600.

“Well, we may not break 5550-5600 on the downside but 100 points downside from current levels looks very likely,” said Sandeep Wagle, Founder & MD, APTART Technical Advisory Services in an interview with ET Now.

“There is a gap in the Nifty around 5680 levels, so there is a good chance that we may find some support there, but from a current level of 5770 and any upside in the markets should be sold into,” he added.

Overnight, US markets ended with modest gains as traders squared positions before the holiday and Friday’s job market data. US markets will remain close on Thursday on account of Independence Day holiday.

The Dow Jones industrial average rose 56.14 points or 0.38 per cent, to end at 14,988.55. The S&P 500 gained 1.33 points or 0.08 per cent, to finish at 1,615.41. The Nasdaq Composite added 10.27 points or 0.30 per cent, to close at 3,443.67.

Asian stocks were trading mixed ahead of the key events including the European Central Bank meeting and the U.S. non-farm payrolls report loomed.

“Unrest in Egypt came to a head on Wednesday, when the country’s armed forces removed President Mohamed Mursi to force a resolution to the political crisis,” Reuters reported.

“Also unsettling investors, the Portuguese government is struggling to survive following the resignations of its foreign minister and finance minister this week,” added the report.

U.S. crude edged up 0.1 percent to $101.33 a barrel.

Japan’s Nikkei 225 index was trading 0.04 per cent lower at 14,049.17 and Hong Kong’s Hang Seng index was trading 1.2 per cent higher at 20,394.12.

South Korea’s Kospi index was trading 0.3 per cent lower at 1830.45. China’s Shanghai index was trading 0.7 per cent lower at 1,979.63.

Eurozone crisis is over, French president says

Jun 102013
 

TOKYO: French President Francois Hollande sought reassure Japanese business leaders on Saturday that the eurozone debt crisis is over but acknowledged that steps to boost the region’s growth and competitiveness need to be taken.

In a speech on the final day of his visit to Japan, Hollande said that the potentially destructive debt crisis has served to “reinforce” Europe and foster greater integration of the 17 member economies that use the euro currency.

He said authorities are developing tools to ensure greater stability and solidarity such as a Europe-wide “banking union” and budgetary rules.

“What you need to understand here in Japan is that the crisis in Europe is over. And that we can work together, France and Japan, to open new doors for economic progress,” he said in the speech at the Imperial Hotel organized by The Nikkei, a major financial newspaper.

Although the eurozone debt crisis that erupted at the end of 2009 has eased, the region’s collective economy has shrunk for six straight quarters and unemployment has reached 12.2 per cent, the highest since the euro was introduced in 1999.

Hollande said Europe needs to put more emphasis on taking steps to promote growth and competitiveness “so that we can have a better presence in the world.”

He also highlighted his proposal to create a common economic government for the eurozone that would set economic policy.

Hollande called Japan an “exceptional partner” and urged both countries to invest more in each other. France’s annual exports to Japan total about 7.5 billion euros ($9.8 billion), while its imports are just over 9 billion euros. Both rank 11th as respective trade partners.

He said some people may have the impression that France and Japan are countries that have left their best years behind them, but they are mistaken.

“We don’t think we are countries from the past. We should lead the world economy,” he said.

He said it was “encouraging” that Japan was embarking on a growth strategy under Prime Miniser Shinzo Abe to revive long stagnant growth through a massive monetary easing and fiscal stimulus.

During the three-day visit, Japan and France agreed to deepen their cooperation on nuclear technology. Asked about the deal amid national debate in Japan over the future of nuclear energy after the Fukushima disaster, Holland reiterated that as forerunners in nuclear energy technology, the two nations need to cooperate over its safety “so that there is no doubt over its reliability.”

Japan’s Mitsubishi Heavy Industries and France’s Areva are cooperating on construction of a reactor in Turkey

In response to a question about China, Hollande said that while France does have trade disputes with China _ and a yawning trade deficit of 25 billion euros _ Paris needs to “work with” Beijing and shouldn’t be expected to choose between Japan and China as they were both important regional economic powers.

“We have the will to work with Asia, and not to oppose any particular country,” he said. “We have a friendly relationship with China for a long time now, and a relationship of exceptional partnership with Japan,” he said. “Please do not ask us to choose.”

Hollande also commented on the trade dispute over solar panels between the European Union and China, saying discussion is ongoing and that the issue will be on the agenda in the upcoming meeting of the European Commission later this month.

“We will debate this with the European Commission because it’s important that all European countries agree on the decisions made” he said.

On Tuesday, the EU announced duties averaging 47 per cent on Chinese-made solar panels, cells and wafers but said it would postpone imposing the full tariffs until August to allow time for negotiation.

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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