Tokyo Stocks Fall on Steel Demand Worries

[HenryTo]

As I have said before, commodities (especially steel) will continue to underperform for the rest of 2005. This latest news from Tokyo is definitely not the end of it. China is still continuing to build steel-making capacity as we speak.
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Tokyo Stocks Fall on Steel Demand Worries
Wednesday May 25, 7:09 am ET
Tokyo Stocks Fall on Steel Demand Worries; U.S. Dollar Lower Against Yen, Higher Against Euro

TOKYO (AP) -- Tokyo stocks fell Wednesday as worries about global steel demand hit steel makers. The U.S. dollar was slightly lower against the yen, but higher against the euro.

The Nikkei Stock Average of 225 selected issues closed down 119.22 points, or 1.07 percent, at 11,014.43 points. The index fell 25.00 points, or 0.22 percent, Tuesday.

The dollar was trading at 107.45 yen at late afternoon Wednesday, down 0.01 yen from late Tuesday and also below the 107.54 yen it bought in New York later that day. It clung to a range of 107.27 yen to 107.68 yen in Tokyo on Wednesday.

Stocks in Tokyo fell as investors sold steel makers' shares on concerns about industry profits following news late Tuesday that Tokyo Steel plans to cut steel sheet prices from June. Tokyo Steel, JFE Holdings and Sumitomo Metal Industries slipped, as did Nippon Steel, which was also weighed down by reports that Tokyo prosecutors had raided the company's headquarters on suspicion of bid rigging for government bridge-building contracts.

Technology bellwethers Sanyo Electric and Fanuc slid on dismal earnings announcements. Consumer electronics maker Sanyo revised down its net loss to 171.5 billion yen ($1.60 billion; 1.27 billion euros) for the last fiscal year ended March 31, from 137.1 billion yen announced in April, citing a revaluation of taxable assets. Fanuc, a maker of industrial robots, forecast a drop in profits this fiscal year.

The Organization for Economic Cooperation and Development's outlook for Japan discouraged buyers. In its semiannual report late Tuesday, the Paris-based OECD predicted that Japan's economy will expand an annualized 1.5 percent this year after adjustment for price changes and then grow 1.7 percent in 2006. That was less robust than growth forecasts for the United States and Europe.

The broader TOPIX, which includes all issues on the Tokyo Stock Exchange's first section, fell 11.62 points, or 1.02 percent, to 1,124.70 points. The TOPIX fell 1.37 points, or 0.12 percent, the day before.

First-section volume rose to 1.315 billion shares, from 1.231 billion on Tuesday. Declining issues outnumbered advancers 1,379 to 199 and 68 issues were unchanged from the day before.

In New York on Tuesday, U.S. stocks rallied on technology issues, with the Nasdaq composite index posting its eighth straight gain.

The Dow Jones industrial average fell 19.88, or 0.19 percent, to 10,503.68. The Nasdaq added 4.97, or 0.24 percent, to 2,061.62.

In currency trading, the euro fell slightly to $1.2576 from $1.2584 late Tuesday in Tokyo and to 135.14 yen from 135.22 yen.

The yield on the benchmark 10-year Japanese government bond fell to 1.225 percent, from Tuesday's close of 1.255 percent. Its price rose 0.16 point to 100.65 points.