Forex News For Today October 03, 2007

Japanese Financial Stocks May Advance; Nikko Cordial May Jump

By Chen Shiyin and Kiyori Ueno

Oct. 3 (Bloomberg) -- Japanese financial stocks may gain after Citigroup Inc. said it plans to buy the rest of Nikko Cordial Corp. it doesn't already own and on speculation that the worst of the U.S. credit-market crisis may be over.

Nikko Cordial may rise after Citigroup said it will buy the remaining shares at a premium to its last traded price. Lenders including Mitsubishi UFJ Financial Group Inc. and securities firms may advance on the view declines triggered by the subprime turmoil were excessive.

Measures tracking banks, consumer lenders and brokerages were among the Topix index's four worst performing industry groups last month as U.S. subprime mortgage losses led to a surge in borrowing costs worldwide.

``Financial stocks may be a target of bargain-hunting,'' said Hiroichi Nishi, an equities manager at Nikko Cordial Securities Inc. in Tokyo. ``There's a view that the subprime problem is in the past, at least for the time being.''

Honda Motor Co. and Nissan Motor Co. may climb after the automakers reported higher U.S. sales last month. Lower sales may drag on shares of their largest rival, Toyota Motor Corp.

Nikkei 225 Stock Average futures expiring in December ended at 17,090 in Chicago, down from the close of 17,110 in Osaka and 17,160 in Singapore yesterday. The Bank of New York Japan ADR Index, which tracks the nation's American depositary receipts, advanced 1.1 percent.

The Nikkei climbed 1.2 percent to 17,046.78 yesterday, closing above 17,000 for the first time since Aug. 9. The Topix index added 1.5 percent to 1,639.79.

About seven stocks advanced yesterday for every five that slid on the New York Stock Exchange after the pace of takeovers picked up and investors speculated falling August home sales may mark the bottom of the housing slump. The Dow Jones Industrial Average slipped 0.3 percent, a day after reaching a record high.

Nikko Cordial

U.S.-traded receipts of Nikko Cordial, Japan's third- biggest brokerage, jumped 19 percent from yesterday's close in Tokyo. Citigroup will buy the remaining 32 percent of the brokerage for about 1,700 yen a share, or about 530 billion yen ($4.6 billion), less than six months after acquiring control of the company.

Measures of banks and securities companies dropped 7.1 percent and 5 percent, respectively, in September, even as the broader measure gained 0.5 percent.

Financial shares rallied yesterday after Citigroup Inc.'s Chief Executive Charles Prince said the largest U.S. bank expects ``to return to a normal earnings environment in the fourth quarter'' and former Federal Reserve Chairman Alan Greenspan said the credit slump may be ending.

Receipts of Nomura Holdings Inc., Japan's largest brokerage, added 0.6 percent from the closing share price in Tokyo yesterday. Those of Mitsubishi UJF, Japan's biggest publicly traded lender, rose 0.9 percent, while Mizuho Financial Group Inc.'s receipts gained 0.6 percent.

Automakers, JFE

Honda, the second-biggest Japanese automaker, reported a 9.4 percent gain in its U.S. sales while those for Nissan, the No. 3, increased 6.7 percent. Toyota, the largest, said its sales fell 4.4 percent.

The industry's annualized sales rate fell to 16.2 million last month, down from 16.6 million a year earlier, according to Bloomberg data. That's the fourth consecutive month of declines.

JFE Holdings Inc. may be active after Nikkei newspaper reported that the company's JFE Steel Corp. unit will raise the price of steel plate used for ships and heavy equipment by 15 percent as raw materials costs increased.

The company will boost the price by about 10,000 yen a ton to about 80,000 yen during this fiscal year, the highest price since the late 1980s, the newspaper said.

JFE will also team up with Toshiba Corp., a maker of heavy electrical machinery, to build small and midsize steam turbines for power plants, the Nikkei reported separately.

To contact the reporter for this story: Chen Shiyin in Tokyo at schen37@bloomberg.net ; Kiyori Ueno in Tokyo at kueno@bloomberg.net .

Source From Bloomberg