Nippon Steel curbs rises of Tokyo stocks

Falls in steel and consumer finance stocks counterbalanced rises in securities companies, leaving Japan’s main indices little changed on Tuesday.

The Nikkei 225 stock average finished up 0.1 per cent at 17,490.19. The broader Topix index fell 0.1 per cent to 1,731.60.

Contrasting with the static performance of large and mid-caps, the volatile Mothers market of smaller growth stocks plunged 3.5 per cent to 1,181.13 on profit-taking after sharp gains in the past two weeks.

A disappointing forecast by Nippon Steel proved more powerful a drag on the sector than continuing speculation on further consolidation. Shares of Japan’s largest steelmaker fell 1 per cent to Y704 after it left its full-year outlook unchanged, despite a 5 per cent increase in profit for the first three quarters.

JFE Holdings was down 1.8 per cent to Y6,680.

Many investors now believe a proposed capital and operational alliance between JFE and South Korea’s Hyundai Steel may provide a spur to further industry consolidation.

Nippon Steel confirmed Tuesday it was considering “deepening ties” with Nakayama Steel Works, a smaller rival, sending Nakayama’s shares up 7.5 per cent to Y486.

UFJ Nicos, the consumer credit company, plummeted 9.1 per cent to Y457 after reporting a group net loss of Y44.1bn for the nine months to December and cutting its full-year forecast for the second time this year. The news helped send down most other consumer finance companies. Promise declined 2.1 per cent to Y4,140, with Aiful dropping 3.3 per cent to Y3,570.

But brokerages gained after the market took a positive view of quarterly results from Japan’s two biggest brokerage houses. Nomura Holdings was 1.3 per cent higher at Y2,400. Daiwa Securities edged up 0.3 per cent to Y1,460. Both companies reported third-quarter profits that were lower than a year before but higher than the previous quarter.

Some export-focused stocks gained from continuing yen weakness, although rises in some export sectors ran out of steam on profit-taking.

Many companies have based their earnings projections on a rate of between Y113 and Y114 to the dollar, but recent weeks have seen the Japanese currency tumble to a four-year low of Y121.65.

Toyota Motor, Japan’s biggest carmaker, rose 0.5 per cent to Y8,040.

But shares in Sony dropped 1.8 per cent to Y5,630, before the entertainment and electronics conglomerate reported third quarter earnings fell 15 per cent due to massive losses at its games console business.

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