JAPAN: Nikkei edges back towards 5-month high as EU central banker says no reason to doubt Irish and Greece recovery plans

Record ID: 462913

  • Title: JAPAN: Nikkei edges back towards 5-month high as EU central banker says no reason to doubt Irish and Greece recovery plans
  • Date: 30th November 2010
  • Summary: TOKYO, JAPAN (NOVEMBER 29, 2010) (REUTERS) UEDA HARLOW FOREIGN EXCHANGE TRADING FLOOR TRADERS CALLING OUT SPOT RATES MORE OF TRADERS ELECTRONIC BOARD SHOWING EXCHANGE RATES MORE OF TRADERS WITH ELECTRONIC BOARD LARGE BOARD SHOWING EURO-DOLLAR TRADING AT 1.3211 - 16
  • Embargoed: 15th December 2010 12:00
  • Keywords:
  • Location: Japan, Japan
  • Country: Japan
  • Topics: Finance
  • Reuters ID: LVA90NM2OTM6W3KH2CQ7ISJ4S6LV
  • Story Text: Japan's Nikkei average edged higher on Monday (November 29), moving back toward a five-month high hit last week, as the yen softened against the dollar and as markets calmed after the EU agreed on a rescue package for Ireland.
    Shares of exporters such as Sony Corp led gains in Tokyo, as the Japanese currency hit a fresh 2-month low against the dollar in early Asia trade.
    Analysts attributed the market's stability to the Irish bailout and Wall Street's relatively good performance, saying those factors combined with the weaker yen is helping shares.
    The 16-nation European Union approved an 85 billion euro package on Sunday (November 28), which included an immediate 10 billion euro recapitalisation for Ireland's debt-stricken banks, fearing contagion would strike fellow strugglers Spain and Portugal.
    By late morning, the benchmark Nikkei was 0.1 percent higher at 10,046.59, after rising as high as 10,149.55, within sight of a five-month high of 10,157.97 hit last week.
    Financial shares, most likely to be impacted by debt woes in the Euro zone were slightly outperforming the broader market with banking stocks up 0.3 percent and other financial stocks about 1 percent higher.
    The European Central Bank Governor Christian Noyer was in Tokyo reassuring markets that the recovery plans for Ireland and Greece were sound.
    "These two countries have taken determined action, very determined action, to repair public finance and to restore competitiveness and growth. And there is absolutely no reason to have any doubts on the soundness of the plans to recovery," he told Japanese business men in Tokyo adding the Euro's existence would not be put in to question.
    "It would be clearly in no country's interests, none of the 16 countries interest, to put that remarkable achievement in question, so putting the Euro in to question is simply and will remain totally off the table," he said.
    The euro fell to its lowest in two months against the dollar on Monday as the market looked past a rescue package for Ireland to other euro zone economies and a euro zone crisis resolution mechanism.
    EU finance ministers endorsed an 85 billion-euro ($115 billion) loan package to help Dublin cover bad bank debts and bridge a huge budget deficit, and approved outlines of a permanent crisis-resolution system which could make private bond holders share the burden of restructuring sovereign debt bought after 2013.
    The euro initially rose in early Asian trade, after the weekend rescue package, but one trader said that move appeared to come from buying by one party, there was no follow-through and it quickly faded.
    A key point for investors is whether the EU has done enough to stem fears from spilling over to other euro zone members such as Portugal, a problem not resolved after Greece was bailed out earlier this year.
    Ireland said the emergency loans would run for an average of 7.5 years, and EU Monetary Affairs Commissioner Olli Rehn said the final interest rate would likely be about 6 percent, slightly lower than what some had feared.
    The dollar was up at its highest levels in two months against a basket of major currencies, at 80.598, having touched 80.628.
    It briefly ticked to a two-month high of 84.20 yen, keeping firm after a gain on Friday (November 26), but quickly retreated to 84.11 yen.
    Investors are keeping a close eye on developments in the Korean Peninsular, where China has called for emergency talks to resolve the crisis between North and South Korea.
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