July 26 (Bloomberg) -- Bank of Japan policy makers will probably keep interest rates at almost zero and pump cash into the world's second-biggest economy at the same pace this week as they seek to end seven years of deflation, economists said.

Board members led by Governor Toshihiko Fukui will maintain the bank's target for reserves it makes available to lenders at between 30 trillion yen ($269 billion) and 35 trillion yen at a one-day meeting on July 27, according to all 12 economists surveyed by Bloomberg News.

http://www.bloomberg.com/apps/news?pid=10000080&sid=ay3EViaZwaBA&refer=asia

March 25 (Bloomberg) -- Japan's consumer prices had their biggest drop in 20 months in February, extending almost seven years of deflation and reducing the chances the central bank will end its zero interest-rate policy.

Core prices, which exclude fresh food, fell 0.4 percent from a year earlier, the government's statistics bureau said today in Tokyo. The decline was the biggest since June 2003.

``Today's number shows that moderate deflation is continuing,'' Finance Minister Sadakazu Tanigaki said at a regular press conference in Tokyo. ``We must cooperate with the Bank of Japan to keep fighting against it.''

Central bank Governor Toshihiko Fukui plans to hold interest rates at almost zero and pump cash into the world's second-largest economy until core prices stop falling. Fukui's bid to end deflation was thwarted as the economy fell into recession last year and increased competition prompted utilities such as Nippon Telephone & Telegraph Corp. to cut prices.

``One factor behind the fall has been the slowing of the economy in the second half of last year that resulted in oversupply putting pressure on prices,'' said Hiromichi Shirakawa, a former central bank official and chief economist at UBS Securities Japan Ltd. in Tokyo. ``I don't think prices will rise this year.''

The median forecast in a Bloomberg News survey of 32 economists was for a 0.3 percent decline in core prices, matching the pace in January.

The benchmark 1.5 percent bond due in March 2015 rose, pushing its yield down 2 basis points to 1.365 percent, the lowest since Feb. 10, as of 4:25 p.m. in Tokyo. A basis point is 0.01 percentage point.

http://www.bloomberg.com/apps/news?pid=10000080&sid=aKhATrsdq8mA&refer=asia

Monday, January 16, 2006

Investor Jim Rogers, who co-founded the Quantum fund with George Soros in 1970, said he will not increase his holdings of Japanese stocks because the country's falling birthrate will make it harder to pay the national debt.

Japan's record-low birthrate caused the population to shrink last year for the first time since the nation began to compile data in 1899, the health and welfare ministry said in December.

"Japanese stocks will rise further in 2006 and 2007, so I will not sell them," Rogers said. "But I have no intention of buying more Japanese stocks because of the serious problem of the declining population."

A declining workforce may reduce the tax revenue for the government, making it harder to pay back the nation's 800 trillion yen (HK$54 trillion) debt. The government has said that the birthrate needs to rise to 2.1 to maintain Japan's current population of about 127 million. "If the current birth rate, which is the lowest in the major developed countries, continues, there will be no Japanese," he said. "Who will pay the enormous debt?"

Japanese women have an average of 1.26 children, the health ministry said. That's compared with 2.04 in the United States, and 1.8 in China.

http://www.thestandard.com.hk/news_detail.asp?pp_cat=22&art_id=9953&sid=6256190&con_type
=1

Jan. 18 (Bloomberg) -- The Tokyo Stock Exchange halted trading for just the second time in its 56-year history after a surge in orders overloaded computer systems.

Trading on the world's second-largest exchange stopped 20 minutes before the regular close. An investigation into Livedoor Co., an Internet company raided by prosecutors two days ago, was a catalyst for the increased orders, Taizo Nishimuro, the exchange's president, said at a press briefing in Tokyo.

From tomorrow, the bourse will shorten its afternoon session by 30 minutes, starting from 1 p.m. local time, instead of the usual 12:30 p.m.

``It's very shameful,'' said Makoto Haga, who helps oversee $1.8 billion of Japanese securities as a fund manager at STB Asset Management Co. ``Where has high-tech-Japan gone?''

Japan's Nikkei 225 Stock Average tumbled 2.9 percent to 15,341.18, extending a rout this week that wiped more than $300 billion off the nation's stock market value.

The Nikkei's point drop briefly exceeded the 692.11 point plunge on the first day after the Sept. 11 terrorist attacks.

The trading halt followed two computer breakdowns at the bourse in the past three months.

Investors offered to sell 263 million shares in Livedoor, more than a quarter of its total, for 496 yen each, 17 percent lower than yesterday's close. It didn't trade at that price, the lowest permitted today under exchange rules, because investors weren't willing to buy enough stock to complete a transaction.

Livedoor Probe

The exchange doesn't disclose the number of orders placed on individual companies, according to Akio Hirota, a member of the exchange's trading systems department.

The bourse halted all trading after processing 4 million orders, the maximum it can handle. It earlier asked brokerages to combine orders from different clients to reduce the number of trades. The system was developed by Fujitsu Ltd., Hirota said.

From tomorrow, trading will be stopped should the number of processed transactions exceed 4 million a day or orders surpass 8.5 million, the exchange said. The exchange said the shortened hours will stay in place ``for a while'' and didn't say when it would reinstate regular trading hours.

Trading of some shares on exchanges in Fukuoka and Sapporo, which also use the Tokyo bourse's system, were also prematurely halted, according the statements by the exchanges.

http://www.bloomberg.com/apps/news?pid=10000101&sid=ad7ZNWxs0TGg&refer=japan

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.

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.

http://biz.yahoo.com/ap/050525/japan_markets.html?.v=6

Nov. 25 (Bloomberg) -- Japan's consumer prices stopped falling for the first time in five months, evidence that the Bank of Japan may be able to end a seven-year fight against deflation.

Core prices, which exclude fresh food, were unchanged in October from a year earlier, the statistics bureau said today in Tokyo, matching a median forecast of 32 economists in a Bloomberg survey. Prices fell 0.1 percent in September.

Sustained price gains would allow central bank Governor Toshihiko Fukui to reduce the amount of cash the bank pumps into the economy, a precursor to raising interest rates from near zero. Rising prices may encourage consumers and companies to spend, helping to sustain growth in a country that's suffered four recessions since an asset bubble burst in 1991.

``The bank may take action in April,'' Masaaki Kanno, chief economist at JP Morgan Securities Asia and a former central bank official, said. ``Though pressures from government officials and legislators are mounting, the Bank of Japan will probably decide the timing of a policy shift by sticking to conditions they have set.''

Japan's economy expanded at an annual 1.7 percent pace in three months ended Sept. 30, the fourth straight quarter of gains, beating the 1.1 percent median estimate projected by economists. The Nikkei 225 Stock Average rose 0.3 percent to close at 14,784.29 today, its highest in five years.

http://www.bloomberg.com/apps/news?pid=10000101&sid=aGbqvy3dnHqc&refer=japan

July 1 (Bloomberg) -- Confidence among Japan's large manufacturers rose more than expected last quarter, the central bank's Tankan survey showed today, adding to optimism the world's second-largest economy will sustain a recovery from recession.

The index of confidence rose to 18 points in June from 14 points in March, the first gain in three quarters, the Bank of Japan said in Tokyo. Confidence among service companies rose to 15 points, the highest since 1992, from 11. A positive number means optimists outnumber pessimists. Stocks gained after the report.

Investment in new factories and equipment by manufacturers such as Toyota Motor Corp. and Mitsubishi Electric Corp. is boosting employment and wages, giving people more money to spend. The government is relying on domestic consumers to make up for a slowdown in exports and sustain a recovery from Japan's fourth recession since 1991.

``The fact that capital spending plans are strong amid export weakness shows that the economy is becoming less reliant on overseas demand,'' said Takahide Kiuchi, chief economist at Nomura Holdings Inc.'s Financial and Economic Research Center in Tokyo. ``Domestic demand may be able to lead the recovery for the first time ever.''

Kiuchi was one of six economists who correctly predicted the index for large manufacturers. The median forecast of 41 economists surveyed by Bloomberg News was for a reading of 16.

The Nikkei 225 Stock Average rose 0.4 percent to 11,630.13 at the 3 p.m. close of trading in Tokyo, led by retailers including Takashimaya Co. The Nikkei advanced for a sixth week, its longest winning streak since September 2003.

More Jobs

Japan's unemployment rate was unchanged at 4.4 percent in May, matching a more than six-year low, and employers created 420,000 new jobs, a separate government report showed today.

Large manufacturers said they expect confidence to fall to 17 in the next survey. Optimism may be tempered by record oil prices, which are sapping overseas demand and driving up costs, said Noriko Hama, a professor at Doshisha University in Kyoto and former chief economist at Mitsubishi Research Institute.

The Tankan, which means short-term economic outlook, surveyed 10,316 companies and is the most closely watched index of business confidence in Japan. Large companies are those with 1 billion yen ($9.1 million) or more in capital. The survey was taken between May 30 and June 30.

Corporate spending accounted for a third of Japan's 4.9 percent annualized pace of growth in the first quarter, the fastest pace in a year.

http://www.bloomberg.com/apps/news?pid=10000080&refer=asia&sid=a2SVvoSrOahg

Sept. 29 (Bloomberg) -- Japan's retail sales rose in August for the first month in four as consumers spent higher wages and bonuses, adding to signs that the world's second-largest economy will expand for a fourth quarter.

Sales climbed 1.5 percent, seasonally adjusted from July, the Ministry of Economy, Trade and Industry said in a report today. From a year ago, sales increased 1.5 percent, more than twice as much as the 0.6 percent expected by 19 economists surveyed by Bloomberg, as prices paid at gas stations soared.

Rising wages and improving job prospects are encouraging Japanese consumers to spend more at retailers such as Ito-Yokado Co. Personal spending, which accounts for more than half the economy, grew at an annual 2.5 percent annual pace in the second quarter and will accelerate, said Richard Jerram, chief economist for Japan at Macquarie Securities Co.

``I'm looking for faster growth on the basis that the improvement in employment and wages is going to continue,'' said Tokyo-based Jerram. ``It looks as if just about everything that could go right is going right with the economic outlook.''

http://www.bloomberg.com/apps/news?pid=10000080&sid=ar5YtPyc.QLs&refer=asia

March 23 (Bloomberg) -- Japanese exports rose at the slowest pace in more than a year in February as shipments of electronic equipment slumped, signaling the nation may not be able to rely on overseas demand to drive a recovery from recession.

Exports grew 1.7 percent from a year earlier, a Ministry of Finance report showed in Tokyo today, the smallest increase since November 2003. The median forecast in a Bloomberg News survey of 11 economists was for a 6.2 percent gain. Imports rose 11.3 percent, and the trade surplus shrank 22 percent to 1.09 trillion yen ($10.36 billion).

Manufacturers including Seiko Epson Corp., the world's second- largest printer maker, say profits are being curbed by a slowdown in global demand for electronics. The trade surplus may shrink further as higher oil prices boost imports and rising interest rates in the U.S. restrain growth in Japan's largest overseas market.

``It's unavoidable that export growth will stall,'' said Seiji Adachi, senior economist at Deutsche Securities Ltd. in Tokyo. ``Consumer spending will be affected should interest rates continue to rise in the U.S. That, coupled with rising oil prices, will hurt demand for exports.''

Japanese stocks fell, led by exporters including Pioneer Corp., after the U.S. Federal Reserve said inflation pressures have picked up, fueling concern the central bank will accelerate the pace of interest-rate increases. The Nikkei 225 Stock Average fell 1.1 percent to 11,712.13 at the 11 a.m. mid-day break in Tokyo.

http://www.bloomberg.com/apps/news?pid=10000080&sid=ad6bjnOVN5lM&refer=asia

Oct. 3 (Bloomberg) -- Japan, the world's biggest debtor nation, may pay the most since March to sell 10-year bonds as central bankers indicate they will end four years of holding interest rates near zero percent.

The yield on Japan's 1.4 percent government bond due in September 2015 is up 15 basis points since it was issued last month. The increase suggests the government will pay about 2.85 billion yen ($25 million) more in annual interest on the 1.9 trillion yen of debt scheduled to be sold at tomorrow's auction. A basis point is 0.01 percentage point.

Bank of Japan Governor Toshihiko Fukui said last week consumer prices may rise by year-end, prompting a change in monetary policy before the fiscal year starts on April 1. Government bonds fell last quarter for the first time in more than a year after Japan's economy expanded at an average annual pace of 4.6 percent in the first half, the fastest in 15 years.

``Investors should prepare for a change in monetary policy,'' said Akihiko Yokoyama, a fixed-income strategist in Tokyo at JPMorgan Securities Asia Ltd., one of 28 primary dealers in Japan's government debt that discuss borrowing with the central bank. ``Hold off buying 10-year bonds as yields are going to grind higher.''

The benchmark 10-year bond ended the quarter yielding 1.475 percent, from 1.165 percent on June 30. JPMorgan forecasts the bond will yield 1.7 percent by year-end, the highest since August 2004.

http://www.bloomberg.com/apps/news?pid=10000080&sid=aFSXdbhn1_nU&refer=asia

July 29 (Bloomberg) -- Japan's industrial production rose in June and the unemployment rate dropped to a seven-year low, bolstering a recovery from recession in the world's second- largest economy.

Production rose a seasonally adjusted 1.5 percent from the previous month after falling 2.8 percent in May, the Ministry of Economy, Trade and Industry said in Tokyo today. The jobless rate slid to 4.2 percent from 4.4 percent, a separate report showed. Unemployment was expected to be unchanged, according to the median forecast in a Bloomberg survey of 33 economists.

Manufacturers including Matsushita Electric Industrial Co., the maker of Panasonic televisions, and auto-parts company Denso Corp. are expanding in anticipation of higher sales in the U.S. and Asia. Brighter job prospects will support the consumer demand that has been driving a recovery from last year's recession, said economist Yoshimasa Maruyama.

``An improvement in exports is prompting companies to boost production,'' said Maruyama, a senior economist at BNP Paribas Securities in Tokyo. ``The unemployment rate is on a gradual declining trend, and that will sustain the strength in consumption.''

The number of jobs available for every 100 applicants rose to 96 in June, the highest in almost 13 years, from 94 in May, today's employment report showed.

``The recovery in the corporate sector is filtering through to households,'' Economic and Fiscal Policy Minister Heizo Takenaka told reporters in Tokyo today.

Stock rose after companies including Matsushita Electric Industrial raised forecasts. The Nikkei 225 Stock Average rose 0.4 percent to 11,899.60 at the 3 p.m. close in Tokyo.

http://www.bloomberg.com/apps/news?pid=10000080&sid=aketrDhCiGjM&refer=asia

June 22 (Bloomberg) -- Japan's trade surplus had the biggest decline in more than three years in May as record oil prices increased import costs and depressed demand for exports, sapping a recovery in the world's second-largest economy.

The surplus fell 68 percent to 297 billion yen ($2.7 billion) from a year earlier, the Ministry of Finance said in Tokyo today, the most since January 2002 and a larger decline than all but one of 31 economists' forecasts. Exports rose 1.4 percent, the smallest gain in 18 months, and imports surged 18.6 percent.

Rising oil prices are leaving consumers in the U.S., Japan's largest overseas market, with less to spend on goods including digital cameras made by Olympus Corp. Oil costs are trimming profits at Japanese manufacturers, threatening to curb investment in machinery and equipment, which accounted a third of the nation's economic expansion in the first quarter of 2005.

``Export growth continues to be subdued, and we're not seeing evidence that that trend is going to be reversed,'' said Taro Saito, a senior economist at NLI Research Institute in Tokyo. ``Oil prices at record levels are also a concern because companies that can't pass on costs are going to see profitability suffer.''

The yen weakened to 108.51 to the dollar at 3:09 p.m. in Tokyo from 108.16 late yesterday in New York. The median forecast in a Bloomberg News survey of economists was for the trade surplus to decline to 499.1 billion yen.

The average price of imported oil rose to a record $51.10 a barrel in May, Japan's Ministry of Finance said, an increase of 49 percent from the same month last year. Japan depends on overseas sources for almost all of its oil needs.

http://www.bloomberg.com/apps/news?pid=10000080&sid=aTU5_htUm.d8&refer=asia

Jan. 23 (Bloomberg) -- Sumitomo Mitsui Financial Group Inc. sold 560 billion yen ($4.9 billion) of shares, Japan's largest stock sale in five years, to help it repay funds received in a government bailout.

The bank, Japan's third-largest, sold 80,000 new shares and 400,000 shares held as treasury stock at 1.166 million yen each, a 2 percent discount to today's closing price, Tokyo-based Sumitomo Mitsui said in a statement.

Sumitomo Mitsui and rivals including Mitsubishi UFJ Financial Group Inc., the world's biggest bank, are accelerating repayment of more than 10 trillion yen in public money as Japan's fastest growth in 15 years raises their profitability. The six biggest banking groups halved dud lending to 6.1 trillion yen in the year through Sept. 30, the Financial Services Agency said last week.

``Sumitomo Mitsui stock outperformed even after the offer was announced,'' said Wataru Kasatani, a financial analyst at Meiji Dresdner Asset Management Co., which holds about $2.5 billion in Japanese stocks. ``That means investors are confident in the bank's business outlook.''

Shares of Sumitomo Mitsui slipped 0.83 percent since the sale was announced on Jan. 6, bettering declines of 6.5 percent by the benchmark Nikkei 225 Stock Average and 6.4 percent by the index of 84 bank stocks traded in Tokyo. The stock declined 1.7 percent to 1.19 million yen today.

http://www.bloomberg.com/apps/news?pid=10000101&sid=aBn_H_xWgZBk&refer=japan

May 16 (Bloomberg) -- Japan's current account surplus unexpectedly shrank in March to its lowest level in more than a year as higher prices of oil and iron ore raised the value of imported goods, sapping economic growth.

The surplus fell 17.5 percent to 1.37 trillion yen ($13 billion), seasonally adjusted, from February, the Ministry of Finance said today in Tokyo. The median forecast in a Bloomberg News survey of 10 economists was for a surplus of 1.68 trillion yen.

Manufacturers including Matsushita Electric Industrial Co., the world's biggest consumer electronics maker, are being squeezed by rising costs of raw materials and falling prices of goods such as flat-panel display screens. A separate government report today showed that producer prices rose at the fastest pace in four months in April, led by gains in oil and chemicals.

``There is a risk that companies are hit by a sharp increase in commodity prices that they are unable to pass on to customers,'' said Naoki Iizuka, chief economist at Dai-Ichi Life Research Institute, a unit of Japan's second-largest insurer by assets. ``That would hurt the wider economy and prompt talk of a recession.''

The current account surplus may fall further as overseas buyers reduce inventories of unsold goods, curbing Japan's economic expansion and leaving the nation dependent on consumers for growth. Exports and capital spending together accounted for more than two-thirds of Japan's growth last year.

``The slowdown in exports confirmed the weakness we're seeing in overseas demand, particularly from Europe and Asia,'' said Masaaki Suzuki, an economist at Mizuho Research Institute who predicted a decline in the surplus. ``Exports aren't going to be able to contribute to growth until overseas demand recovers later this year.''

http://www.bloomberg.com/apps/news?pid=10000080&sid=ag2UQiIEzBf4&refer=asia

May 17 (Bloomberg) -- Japan's economy grew at a 5.3 percent annual pace in the first quarter, twice as fast as economists forecast, as rising wages prompted consumers to boost spending. Stocks gained and bonds fell.

The world's second-largest economy accelerated from a revised 0.1 percent pace in the fourth quarter, a report by the Cabinet Office in Tokyo showed today. The median forecast of 28 economists surveyed by Bloomberg was for gross domestic product to expand 2.4 percent.

``The economy is on a broad recovery trend,'' Economic and Fiscal Policy Minister Heizo Takenaka told reporters in Tokyo.

Consumer spending at retailers including Aeon Co. and Matsuzakaya Co. accounted for more than half of the expansion, helping sustain a recovery from last year's recession. Japan's government needs to sustain growth to end seven years of deflation and cut the world's largest government debt.

``Growth, until now, has been too weak,'' said Naoki Murakami, senior economist at Goldman Sachs (Japan) Ltd., whose forecast for a 4.1 percent pace of first-quarter growth was the most accurate. ``It's highly possible that the economy can reach growth of 2 percent'' in the fiscal year started April 1, compared with 1.9 percent last year.

Japan outpaced the 3.1 percent expansion in the U.S. in the first quarter. The 12 nations sharing the euro grew 0.5 percent from the previous quarter. China, Japan's second-largest export destination, is trying to cool its economy after growth of 9.5 percent last quarter.

The Nikkei 225 Stock average advanced 0.3 percent to 10,978.11 at 11 a.m. in Tokyo, led by Toyota Motor Corp. Benchmark 10-year bonds fell, pushing yields up 1.5 basis points to 1.320 percent. A basis point is 0.01 percentage point.

http://quote.bloomberg.com/apps/news?pid=10000006&sid=awW1676sRFdc&refer=home

Sept. 26 (Bloomberg) -- Japan's manufacturers became optimistic in the three months to Sept. 30 for the first quarter in four, a government survey showed.

Confidence among manufacturers with at least 1 billion yen ($9 million) in capital was 6.4 points in the three months ended Sept. 30, up from minus 2.4 points the previous quarter, according to a survey jointly released by the Cabinet Office and Ministry of Finance in Tokyo today. A positive number means optimists outnumber pessimists.

Japan's economy expanded at a 3.3 percent pace in the second quarter as companies increased spending and rising wages encouraged consumers to spend. Today's report bolsters expectations that the Bank of Japan's Tankan survey, the nation's most closely watched gauge of business confidence, will show an improvement of sentiment when it's released on Oct. 3

http://www.bloomberg.com/apps/news?pid=10000101&sid=aPYY.mq9UllU&refer=japan

Sept. 15 (Bloomberg) -- Japanese households became less pessimistic in August for a second month as wages rose and job prospects improved, adding to expectations that consumer spending will spur economic growth.

Confidence among households with two or more people rose to 48.4 from 48.1 in July, the Cabinet Office said today in Tokyo. Readings below 50 mean pessimists outnumber optimists. Overall confidence, including single households, climbed to 48.4 from 48.2 in July. In Tokyo, confidence gained to 49.1 from 48.4.

Evidence the world's second-biggest economy is accelerating has improved confidence among Japanese people, who on Sept. 11 rewarded Prime Minister Junichiro Koizumi with a landslide election victory. Wage rises are also driving consumer spending, which accounts for more than half the economy, aiding sales at retailers including Tiffany & Co.

http://www.bloomberg.com/apps/news?pid=10000080&sid=aAGbJ_V3Unfs&refer=asia

Feb. 20 (Bloomberg) -- Japan's economy will expand faster than anticipated this year and next, according to economists at Macquarie Securities and Barclays Capital, who raised their forecasts after last week's fourth-quarter growth report.

The world's second-largest economy will probably expand 3.6 percent in the year ending March 31 2007, up from a previous estimate of 3 percent, Macquarie Securities wrote in a report today. Barclays Capital today raised its Japan growth forecast for fiscal 2006 to 2.7 percent from 2.4 percent.

Rising stock prices and a decline in unemployment is fueling consumer spending, which accounted for a third of Japan's growth last quarter. The report adds to evidence that the economy's recovery from three recessions since 1990 is sustainable, one of the conditions the Bank of Japan says has to be met for it to end its five-year old deflation fighting policy.

``Japan is forecast to be the fastest-growing G7 economy over the next two years,'' Richard Jerram, chief economist for Japan at Macquarie Securities Ltd. in Tokyo, wrote in a report. ``The biggest contribution to growth is coming from private sector demand.''

The economy grew at an annual 5.5 percent pace in the fourth quarter, more than the 4.9 percent expansion expected by economists. Domestic demand accounted for more than half of the growth in gross domestic product, which outpaced both the U.S. and Europe.

http://www.bloomberg.com/apps/news?pid=10000101&sid=aDGLe8WUn.mc&refer=japan

Sept. 12 (Bloomberg) -- Japan's economy grew at a 3.3 percent pace in the second quarter, triple the initial estimate, adding to investor confidence in the recovery after Prime Minister Junichiro Koizumi won a landslide election victory.

The estimate, released by the Cabinet Office today in Tokyo, compares with an Aug. 12 estimate for a 1.1 percent annualized pace of expansion. Spending by businesses increased 3.6 percent from the 2.2 percent initially estimated. Growth in the world's second-largest economy averaged 4.6 percent in the first half, the fastest in 15 years.

Japanese stocks gained as an accelerating economy and the election victory increased optimism that Koizumi will be able to sell state assets, cut government debt and give companies a bigger role in spurring growth. Higher business spending may lead to a sustainable recovery after four recessions since 1991, economist Jesper Koll said.

``Corporate Japan is investing in Japan,'' said Koll, Tokyo- based chief economist for Japan Merrill Lynch & Co. ``Companies like Toshiba and Canon are building factories here in Japan. That is what's creating the growth that is also going to create lasting employment.''

The Nikkei 225 stock average rose to its highest since June 2001, jumping 1.6 percent to 12,896.43 at the close. Ten-year bond yields added 2.5 basis points to 1.365 percent. The yen was little changed at 109.77 per U.S. dollar at 4:53 p.m. in Tokyo, from 109.68 on Sept. 9 in New York.

http://www.bloomberg.com/apps/news?pid=10000080&sid=arRVLvzIn3SY&refer=asia

Jan. 23 (Bloomberg) -- Livedoor Co. founder Takafumi Horie, the 33-year-old Internet millionaire who waged a takeover battle with Japan's largest broadcaster, was arrested to face charges he violated securities laws.

The company is under investigation by the Tokyo District Public Prosecutors Office and the Securities and Exchange Surveillance Commission for allegedly providing false information about an acquisition and overstating earnings, according to a statement from prosecutors today.

Livedoor's offices and homes of its executives were raided last week by prosecutors, triggering a plunge in Japanese stocks that led the exchange to halt trading for the second time in its history. Horie, the chief executive, garnered national attention last February when he tried to take over Fuji Television Network Inc.'s radio affiliate before settling on an alliance.

Ryoji Miyauchi, the 38-year-old executive in charge of finances; Fumito Okamoto, president of Livedoor Marketing Co.; and Osanari Nakamura, head of Livedoor's finance unit, were also arrested, prosecutors said.

Livedoor's stock in Frankfurt recently fell 31 percent to 1.38 euros, or 194 yen. The company's Tokyo-traded shares today dropped by their daily 80-yen limit to 256 yen.

Shares of Livedoor, which offers mostly Internet services such as stock trading, online advertising and travel bookings, lost 52 percent last week, erasing 381 billion yen ($3.3 billion) of their market value.

Atsushi Nagatoshi, a Livedoor spokesman, said he can't comment on the arrests because he doesn't have accurate information.

http://www.bloomberg.com/apps/news?pid=10000101&sid=a3LOhlukrxaU&refer=japan

Retail sales rose 1.1 percent in 2005 to 129.52 trillion yen, chalking up their first year-on-year rise in nine years, due largely to soaring fuel prices and robust clothing sales, the government said Friday.

The strong clothing sales were attributed to the "Cool Biz" casual dress campaign pushed by the government during the summer and a cold spell.

Sales by wholesalers rose 3.1 percent to 424.32 trillion yen in 2005 for the second yearly increase, pushing combined sales by retailers and wholesalers in the reporting year up 2.6 percent from 2004 to 553.84 trillion yen, up for the second year in a row, the Ministry of Economy, Trade and Industry said.

The data suggest an uptrend in personal spending, saying that in areas other than fuel and clothing, auto sales were generally strong and sales at drugstores and do-it-yourself stores were also firm in the reporting year, a METI official said.

Japanese retailers posted their last year-on-year gain in 1996, when sales rose 1.0 percent, he said.

http://www.japantimes.co.jp

Dec. 28 (Bloomberg) -- Japanese industrial production rose in November for the first month in three as semiconductor companies and automakers boosted output to meet demand in the U.S. and China.

Production rose a seasonally adjusted 1.5 percent from October, the Ministry of Economy, Trade and Industry said today in Tokyo. The jobless rate unexpectedly fell to 4.5 percent in November, the lowest since January of 1999, from 4.7 percent, the statistics bureau said in a separate report today.

A rebound in overseas demand is prompting manufacturers including Sony Corp. to raise production after cutting stockpiles, helping sustain a recovery in the world's second-largest economy as consumer spending slows. Spending by households headed by a salaried worker declined 0.9 percent in November from October, another government report showed today.

``It's clearly a turning point for industrial production,'' said Glenn Maguire, an economist at Societe Generale Australia Ltd. in Sydney. ``There has been a slowing in the economy in production and inventory corrections in some key sectors. I think we are getting close to that being corrected.''

The Nikkei 225 Stock Index rose to a five month-high, gaining 0.5 percent to 11,424.13 at the 3 p.m. close of trading in Tokyo, led by electrical machinery makers including Tokyo Electron Ltd. The 1.5 percent bond due December 2014 fell, pushing its yield up 3 basis points to 1.425 percent at 3:53 p.m. in Tokyo. A basis point is 0.01 percentage point.

http://www.bloomberg.com/apps/news?pid=10000101&sid=aYjP5PJJqlVo&refer=japan

Japan's Nikkei Has First Consecutive Yearly Advance Since 1995

Dec. 30 (Bloomberg) -- Japanese stocks rose, with benchmarks posting their first consecutive yearly gains in almost a decade. Exporters including Honda Motor Co. and Fuji Photo Film Co. advanced after the yen fell against the dollar, reducing concern a stronger local currency will trim the value of U.S. sales.

The weaker yen ``will benefit exporters, at a time when the U.S. economic outlook seems to be improving,'' said Masanao Yoshitake, who manages the equivalent of $1 billion in Japanese equities at RCM Japan Ltd. in Tokyo.

Shares of shipping companies including Nippon Yusen K.K. dropped after the Nihon Keizai newspaper reported that ocean freight rates have plunged 57 percent from a month ago.

The Nikkei 225 Stock Average rose 107.20, or 0.9 percent to 11,488.76 at the 11 a.m. close in Tokyo. The benchmark closed at its highest since July 13. The Topix index gained 10.22, or 0.9 percent, to 1149.63. The Topix Marine Transportation Index was the only industry group in the broader index to drop.

For the year, the Nikkei and Topix had their first back-to- back yearly gains since the benchmarks climbed for three straight years in the period ended 1995. The Nikkei gained 7.6 percent in 2004, while the Topix advanced 10 percent.

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Jan. 4 (Bloomberg) -- Prime Minister Junichiro Koizumi said his top economic policy goal for 2005 is winning approval to sell Japan Post, the world's largest savings bank, allowing private companies to manage some of its $3.4 trillion in assets.

``The private sector should be allowed to do what it does best,'' Koizumi said today at a New Year's press conference in Tokyo. He will ask parliament this month to approve plans to split up and sell state-run postal services beginning in 2007.

The plans would shrink Japan Post, helping Mizuho Financial Group Inc. and other banks compete for deposits and fund management business. Koizumi may have to weaken his proposals to ensure the backing of dissident lawmakers, who say the sale will trigger job losses among Japan Post's 400,000 employees, according to Minoru Morita, a political analyst.

``About a third of LDP lawmakers oppose Koizumi's selloff plan,'' said Morita, the head of Morita Research Institute and the author of books on public finance and domestic politics. ``It may end up being privatization in name only.''

Koizumi's government depends on coalition partner New Komeito for its 43-seat majority in the national parliament's 480-seat lower house. By itself, the Liberal Democratic Party has a nine- seat majority.

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Japan's Stocks Rise; Mitsui O.S.K. Advances; Jasdaq Index Jumps

Jan. 6 (Bloomberg) -- Japanese stocks rose, led by shipping companies such as Mitsui O.S.K. Lines Ltd., after the government announced plans to cut fees at major ports by as much as 40 percent to rates comparable with northeast Asian rivals.

``You can still bet on shipping stocks given their solid prospects for top-line growth,'' said Akio Yoshino, who helps manage the equivalent of $16 billion in assets at Societe Generale Asset Management (Japan) Co. in Tokyo. ``The plan to reduce port costs is just another boost for marine transport stocks.''

The Nikkei 225 Stock Average added 54.74, or 0.5 percent, to 11,492.26 at the 3 p.m. close in Tokyo. The Topix gained 4.61, or 0.4 percent, to 1147.97.

Yaskawa Electric Corp., an industrial robot maker, had its biggest jump since May 2003 after the Nihon Keizai newspaper said the company will jointly develop industrial robots with Toyota Motor Corp.

The Jasdaq Stock Index, which has a market value equivalent to only 3.6 percent of the Topix, rose for a 14th day, the longest winning streak since the period ended Sept. 13, 1999, when it rose for 16 days. E*Trade Securities Co. and Rakuten Inc. led the gains after announcing plans to expand their businesses.

Some 1.18 trillion yen ($11 billion) in shares included in the Topix traded, 11 percent more than the daily average for the past three months. Stocks that rose outnumbered those that fell 958 to 513 on Tokyo Stock Exchange's first section.

Societe Generale Asset's Yoshino said he expects the Nikkei to rise to as high as 13,000 this year and favors shares of steelmakers, automakers and chemical makers based on their price- earnings ratios.

Shipping Lines

Mitsui O.S.K., Japan's biggest tanker owner, advanced 11 yen, or 1.8 percent, to 622. Nippon Yusen K.K., Japan's biggest shipping company, rose 14 yen, or 2.5 percent, to 570. Kawasaki Kisen Kaisha Ltd., the nation's third-largest shipping line, jumped 17 yen, or 2.6 percent, to 672.

The transport ministry plans to reduce port usage costs to the same level as those in Busan, South Korea and Kaohsiung, Taiwan, which are about 30-40 percent lower, said Hiroshi Ishihara, an official at the ministry's Port and Harbor Bureau.

Japan's top three shipping lines are expecting record earnings as they benefit from record rates for oil tankers and bulk carriers in the last quarter amid China's increasing demand for raw materials and Asia's expanding trade with Europe and the Americas. About 80 percent of goods traded globally are carried by sea.

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Japan Will Let Tsunami Affected Nations Freeze Debt (Update6)

Jan. 6 (Bloomberg) -- Japan said it will let Indonesia and other nations struck by the Asian tsunami freeze payments on debt worth at least $65 billion and pledged to help the region rebuild roads and other infrastructure.

``If nations request it then we should allow debt payments to be postponed,'' Prime Minister Junichiro Koizumi said today in a speech delivered at a summit of Asian leaders in Jakarta on aid for tsunami victims. ``There is a need for a long-term plan to rebuild and Japan will do all it can to help.''

Japan already promised $500 million in emergency aid to help provide food, medicine and shelter for survivors of the Dec. 26 tsunami that killed more than 150,000 people in Asia and Africa. The debt relief plan would let Indonesia and other countries struck by the wave divert money to reconstruction.

``A debt moratorium will be good because it will relieve the burden on the budget'' in Indonesia, said Katarina Setiawan, deputy head of research at Kim Eng Securities in Jakarta.

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RECOVERY STALLING

Key gauge of economy again shows bust

A key gauge of the current state of the economy stayed below the boom-or-bust line of 50 percent in November for the fourth straight month, a sign that the nation's economic recovery has stalled, according to government data released Tuesday.

The index of coincident economic indicators stood at 44.4 percent for the reporting month, the Cabinet Office said in a preliminary report, citing slumping production amid continued adjustments in the information technology sector.

It marks the first time since the period from November 2001 to February 2002 that the index has stayed below the 50 percent line for four straight months.

A reading above 50 percent is considered a sign of economic expansion. A figure below it is seen as a sign of contraction.

A Cabinet Office official said the economy has recently been weakening, and the index was likely flirting with the threshold in December, having been sandwiched between sluggish industrial output and improving consumption and employment.

Hitoshi Asaoka, an economist at Mitsubishi Research Institute Inc., said, "Given slowing exports and the adjustment in the IT sector, which I think has proceeded smoothly, the index is likely to hover around the line in the coming months."

Asaoka said he does not see the economy undergoing a sharp slowdown, and that it will gather steam around June after overcoming the current soft patch, which primarily stems from inventory and production adjustment in the IT sector.

The index of leading indicators, which predicts economic developments about six months ahead, came to 30 percent, marking its third straight month below the threshold.

The index of lagging indicators, designed to measure economic performance in the recent past, came in at 100 percent, above the threshold for the third consecutive month.

Of the 11 indicators used to calculate the coincident index, nine indicators were available for the preliminary report.

The Japan Times: Jan. 12, 2005

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Japan's December Wholesale Price Gains Slow to 1.9% (Update4)

Jan. 14 (Bloomberg) -- Japanese wholesale price inflation slowed in December for the first time in 10 months, easing pressure on companies to cut costs to protect profits.

An index that tracks prices for goods and energy bought by companies gained 1.9 percent from a year earlier, a Bank of Japan report showed in Tokyo today, after rising 2 percent in both October and November. Prices in December were unchanged from November. The monthly figure isn't adjusted for seasonal variations.

Companies including Mitsubishi Electric Corp., which makes DVD players and air conditioners, face a profit squeeze because a six-year streak of consumer price declines prevents them from passing higher costs on to customers. Wholesale price inflation may ease further as oil prices decline and global economic growth slows, said economist Yukari Sato.

``Last year, a global economic recovery was stoking demand for materials and energy, but this year, the economies of Japan, Europe and China are expected to lose momentum,'' said Sato, chief economist at Credit Suisse First Boston in Tokyo. ``Global demand is expected to slacken.''

Japanese economic growth will slow to 2.1 percent this year from last year's projected 4 percent pace, the Organization for Economic Cooperation and Development said last month. Growth in China, the world's biggest consumer of steel, copper and cement, is forecast to slow to 8 percent from 9.2 percent.

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Yoko Nishikawa

January 27, 2005

Japan's trade with the mainland and Hong Kong has exceeded its trade with the United States - its biggest trading partner for decades - for the first time last year, reflecting China's growing clout in the global economy.

The mainland and Hong Kong's share of Japan's overall trade stood at 20.1 percent, while that with the United States stood at 18.6 percent, according to Tokyo's data.

``It reflects lower customs duties due to China's entry into the World Trade Organization, and more importantly the shift of Japanese firms moving production to China,'' Morgan Stanley economist Osamu Tanaka said.

The mainland's share of trade without Hong Kong stood at 16.5 percent last year, up from 15.5 percent in 2003.

The mainland's rapid economic growth - 9.5 percent last year - has created huge demand for imported goods, which has fueled a strong export growth at Japanese companies that has sustained the country's recovery.

Many Japanese firms escaping high costs at home and a strong yen have also made the mainland their manufacturing base, further boosting trade.

The mainland has been for some time Japan's largest source of imports, though analysts said that despite China's importance, trade with the United States remains a big part of Japan's economy.

http://www.thestandard.com.hk/stdn/std/China/GA27Ad01.html

Japan's industrial production expanded an unadjusted 5.5 percent in 2004, marking a second straight yearly rise, the government said Friday.

The increase was partly attributed to strong demand for digital home appliances in the first half of the year.

This marks the highest growth since the production index registered a 5.7 percent rise in 2000, the Ministry of Economy, Trade and Industry said in a preliminary report.

The index of output at mines and factories stood at 100.2 against the base of 100 for 2000.

The index of industrial shipments grew 5.3 percent to 102.4, marking a second consecutive yearly rise, while that of industrial inventories slipped 0.7 percent to 87.6, down for a fourth year.

Despite the strong annual figure, output has lost steam in recent months.

The index of industrial production fell 0.8 percent in the October-December period from the previous quarter, marking a second straight quarterly drop.

In contrast to the September-December period, the production index gained 0.5 percent in the January-March period and 2.6 percent in the April-June period, it said.

Still, many economists believe the current slowdown in production will not be as serious as in past recessions and production will pick up in the second half of this year as inventory is adjusted in the information-technology sector.

http://www.japantimes.co.jp/cgi-bin/getarticle.pl5?nb20050129a4.htm

CPI declines for the fifth straight year as deflation continues to dog economy

The key gauge of consumer prices in Japan fell 0.1 percent in 2004, marking a fifth straight yearly decline and underscoring that the economy is still beset by deflation, the government said Friday.

The nationwide consumer price index, excluding volatile prices of perishable foods, came to 97.9 in 2004 against the 2000 base of 100, the Internal Affairs and Communications Ministry said in a preliminary report.

The margin of decline was smaller than that for 2003, when the index dipped 0.3 percent. In 2002, the index dropped 0.9 percent, the steepest fall since comparable data became available in 1971.

The latest development is thus viewed as a sign that the economy's deflationary pressures are easing.

Yet a ministry official said it is unclear whether this trend will continue, with the shrinkage having resulted primarily from one-time factors, including oil price spikes.

Meanwhile, the core CPI for Tokyo's 23 wards, seen as the leading indicator of prices nationwide, stood at 96.4 in January, down 0.5 percent from a year earlier and marking a 64th consecutive month of decline, the ministry said.

http://www.japantimes.co.jp/cgi-bin/getarticle.pl5?nb20050129a3.htm

Combined sales of retailers, wholesalers expands for first time in 13 years

The government said Thursday that the combined sales of Japan's wholesalers and retailers in 2004 rose 2.2 percent from a year ago to 539.70 trillion yen for the first improvement in 13 years, but noted that retail sales are now flat.

Wholesalers' sales rose 3.1 percent to 411.58 trillion yen in the first increase in 13 years, due mainly to an uptrend in crude oil prices and steady sales of digital appliances, the Ministry of Economy, Trade and Industry said.

But retail sales fell 0.6 percent to 128.12 trillion yen for the eighth straight yearly decline, indicating that personal spending is still weak amid persistent deflation.

Sales by large retailers -- supermarkets and department stores -- declined 1.5 percent to 21.43 trillion yen for the seventh consecutive yearly fall.

Supermarket sales dropped 0.6 percent to 12.57 trillion yen for the third straight yearly decline, and department store sales shrank 2.8 percent to 8.85 trillion yen for the seventh yearly drop in a row, the ministry said.

Convenience store sales meanwhile expanded 2.7 percent to 7.29 trillion yen for the sixth straight yearly rise.

In December, overall retail sales fell 0.7 percent from a year earlier to 12.7 trillion yen after showing 0.6 percent growth in November.

http://www.japantimes.co.jp/cgi-bin/getarticle.pl5?nb20050128a3.htm

Sony Corp. said Thursday its operating profit dropped 13 percent on a year-on-year basis to 138.2 billion yen in the October-December period, dragged down by weak sales of conventional televisions and portable audio products.

Katsumi Ihara, the firm's chief strategy officer, told a news conference that Sony will rejuvenate its core consumer electronics business by boosting its display operations, focusing on liquid crystal display TVs and rear-projection TVs.

During the third quarter of fiscal 2004, revenue was down 7.5 percent to 2.15 trillion yen. Net profit in the period jumped 55 percent to 143.8 billion yen, though this was mostly due to lower tax expenses in the United States.

The company has suffered amid a lackluster performance by its consumer electronics business. It has increased its dependence on blockbusters in its film division.

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Monetary base up 3.9% in January

Japan's monetary base grew 3.9 percent in January from a year earlier for the 48th consecutive monthly increase, the Bank of Japan said Wednesday.

The average daily balance of the monetary base -- cash in circulation plus current-account deposits held at the central bank by financial institutions and Japan Post -- totaled 112.513 trillion yen in the reporting month, the BOJ said.

The long-running expansion in the monetary base reflects the BOJ's quantitative monetary easing policy adopted in March 2001 to fight deflation.

The Japan Times: Feb. 3, 2005

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Monthly household spending averaged 304,203 yen in 2004, up a real 0.5 percent from the previous year, the government said Tuesday.

The rise follows a 0.8 percent drop in 2003 and a 0.3 percent gain in 2002, after adjusting for changes in prices, the Internal Affairs and Communications Ministry said in a preliminary report.

The Japan Times: Feb. 9, 2005

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http://www.japantimes.co.jp/cgi-bin/getarticle.pl5?nb20050209a7.htm

Feb. 10 (Bloomberg) -- Japanese wholesale prices rose for an 11th month January, maintaining pressure on profits of companies that can't pass higher costs on to customers.

An index that tracks prices for goods and energy bought by companies gained 1.3 percent from a year earlier, a Bank of Japan report showed in Tokyo today. The median forecast of 32 economists surveyed by Bloomberg News was for a 1.7 percent gain. Prices rose a revised 1.8 percent in December.

Profits at companies including Funai Electric Co. have been squeezed as raw materials grow more costly while Japan extends a more than six-year bout of consumer price deflation. Pressure on profits may ease as the pace of economic growth picks up later this year, supporting prices of non-durable and other goods, said economist Mamoru Yamazaki.

``Price hikes in energy and commodities have basically been absorbed by the corporate sector,'' said Yamazaki, chief economist at Barclays Capital in Tokyo. ``Upward pressure on prices of final goods is likely to increase after a pickup in the overall economy.''

Net income at Funai Electric, the world's biggest maker of videocassette recorders, had a 13 percent decline in the three months ended Dec. 31 because of higher raw material costs, the company said on Feb. 3. Net income fell to 6.5 billion yen ($61.6 billion). The company left its full-year profit forecast unchanged after slashing it in November because of rising raw material costs.

Consumer prices in Japan are extending six years of declines, partly because of cuts in telephone and utility charges.

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Core private-sector machinery orders expanded 4.4 percent in 2004 from the previous year, marking a second straight annual increase, the government said Thursday.

Core machinery orders totaled 11.54 trillion yen in 2004, up from 11.05 trillion yen in 2003, the Cabinet Office said.

Private-sector machinery orders are considered a leading indicator of corporate capital spending six to nine months ahead. These core orders exclude orders for ships and from utilities, which tend to vary widely due to their magnitude.

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The Japan Times: Feb. 11, 2005

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June 28 (Bloomberg) -- Japan's retail sales fell in May as unseasonably cool weather prompted consumers to trim spending on items such as summer clothing. Retail stocks rose on expectations sales will rebound after temperatures climbed to above-average levels in June.

Sales declined 1.5 percent, seasonally adjusted, from April, the Ministry of Economy, Trade and Industry said today in Tokyo. The median forecast in a Bloomberg survey of three economists was for a drop of 1.4 percent. Retail sales rose 2.7 percent in May from a year earlier.

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Feb. 14 (Bloomberg) -- The yen had the biggest gain in two weeks in Asia after a government report showed Japan's December current-account surplus unexpectedly widened.

The gap expanded 28 percent in December, to 1.78 trillion yen ($16.9 billion) from 1.39 trillion yen in November, seasonally adjusted, the Ministry of Finance said in Tokyo. The median forecast in a Bloomberg News survey of 10 economists was for a surplus of 1.39 trillion yen.

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Current account surplus hits record high

Japan's current account surplus rose 17.9 percent in 2004 from a year earlier to a record 18.59 trillion yen.

The Finance Ministry said Monday in a preliminary report that the surplus stemmed from a trade surplus with other Asian economies and the United States and a record-high surplus in the income account. The previous record was 15.77 trillion yen, set in 2003.

Private-sector economists predict the current account surplus will remain at high levels this year due to the steady growth of the world economy, especially growing demand from China, whose economy is projected to grow about 8 percent this year after expanding 9.5 percent in 2004.

"Japan is likely to continue having a trade surplus this year because of strong Chinese demand for Japan's cutting-edge technology, as seen in machinery, electronics parts and cars, and high growth potential in the Asian economy overall," said Tom Kirchmaier, a lecturer in international management at the London School of Economics and Political Science.

The current account balance -- the broadest gauge of trade in goods and services -- is the difference between a nation's income from foreign sources and foreign obligations payable, excluding net capital investment.

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Nonresident investors remained net buyers of Japanese stocks and bonds in 2004 for the second straight year, with net purchases reaching a record 14.99 trillion yen, the Finance Ministry said Monday.

Their buying in the reporting year was underpinned by a recovery in Japanese corporate earnings. The previous record was 9.84 trillion yen, set in 2000, when the information technology bubble was at its peak.

http://www.japantimes.co.jp/cgi-bin/getarticle.pl5?nb20050215a2.htm

By Yuri Kageyama, AP Business Writer  

Mitsubishi Tokyo Financial Group, UFJ Holdings Disclose Terms of $38B Merger, Announce Job Cuts

TOKYO (AP) -- Two Japanese banking giants disclosed Friday terms of their planned 3.99 trillion yen ($38 billion) merger which would create the world's largest bank, but also said the combination will mean 6,000 job cuts, or about 8 percent of their current global work force.

http://biz.yahoo.com/ap/050218/japan_bank_merger_7.html

Japan's current account surplus shrank 8.9 percent in the first half from a year earlier to 8.752 trillion yen, marking a first decline in four half-year periods, the Finance Ministry said Thursday.

The fall was linked to an ongoing surge in oil prices, which inflated the value of imports, and to an export slowdown stemming from a period of global inventory and production adjustment in the information technology sector, the ministry said.

Yet the surplus was the third-biggest on a half-year basis, highlighting Japan's brisk trade with the rest of the world, especially with other Asian economies, it said.

The balance of trade in goods and services posted a surplus of 3.913 trillion yen, down 27.1 percent from a year earlier, following a 1.3 percent increase in the second half of 2004, the ministry said in a preliminary report.

The surplus in merchandise trade fell 24.9 percent to 5.352 trillion yen, marking a second straight half-yearly decline.

Exports grew 4.1 percent to 29.390 trillion yen, up for the seventh consecutive six-month period. Imports climbed 13.9 percent to 24.038 trillion yen, marking a sixth straight half-yearly increase.

Imports of crude oil rose 33.8 percent and that of oil products 31.3 percent as the average oil price for the reporting period jumped 36.8 percent from a year earlier to $45.20 a barrel, the highest level on record.

Exports of steel rose 27.5 percent, while those of automobiles increased 5.8 percent.

Private-sector economists believe the current account surplus will keep shrinking in the second half of this year, with the margin of decline depending on developments in crude oil and other raw materials prices.

http://www.japantimes.co.jp

Feb. 23 (Bloomberg) -- Japanese export growth slowed in January, suggesting that overseas demand may not be strong enough to pull the world's second-largest economy out of recession.

Exports grew 3.2 percent from a year earlier, the slowest pace in more than year, the Ministry of Finance said in a report in Tokyo today. Imports rose 11.6 percent, and the trade surplus narrowed 60 percent to 200.8 billion yen ($1.93 billion.) The median forecast in a Bloomberg News survey of economists was for a 509 billion yen surplus.

Weaker demand from the U.S. and the European Union may curb exports this year. Japan is counting on overseas sales by companies including construction equipment maker Komatsu Ltd. to fuel growth as consumer spending stagnates.

``The key to getting out of the recession is exports,'' said Peter Morgan, chief economist at HSBC Securities Japan Ltd. ``It doesn't look like we're getting a strong bounce back yet.''

The yen weakened to 104.44 to the dollar at 9:34 a.m. in Tokyo from 104.04 late yesterday in New York. The Nikkei 225 Stock Average fell 1.2 percent to 11,463.12, led by exporters including Nissan Motor Co.

Exports to the U.S. fell 1.6 percent in January from a year earlier, today's report showed. Exports to the E.U. dropped 6.8 percent. Shipments to Asia rose 7.9 percent.

From December, the trade surplus narrowed 9.6 percent to 854.5 billion yen, seasonally adjusted. Exports rose 4.3 percent, and imports gained 7.6 percent.

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April 26 (Bloomberg) -- Japan's household spending, buffeted by reduced overtime hours and stagnant wages, fell for a second month in March and the economy lost jobs, suggesting consumers won't help sustain a recovery from last year's recession.

Spending by households headed by a salaried worker slid 1.1 percent from February, seasonally adjusted, to average 353,639 yen ($3,342), the statistics bureau said today in Tokyo. The economy shed 270,000 jobs and the workforce shrank by 430,000, pushing the jobless rate down to 4.5 percent from 4.7 percent.

The yen fell on concern manufacturers are limiting wage increases, damping the consumer spending that makes up half the economy and cutting sales at retailers including Takashimaya Co. Rising metals and oil costs may further squeeze profits, curbing growth as Japan emerges from its fourth recession since 1991.

``If companies are under pressure in terms of profitability they will likely decrease employment and wages,'' said Hiromichi Shirakawa, chief economist at UBS Securities Japan Ltd., a former Bank of Japan official. ``It's of course quite difficult for us to anticipate robust and strong growth in Japan.''

The yen weakened to 105.93 per dollar at 11:26 a.m. in London, from 105.67 late in New York yesterday. The median forecast of three economists in a Bloomberg survey was for household spending to fall 1 percent.

Consumer prices fell in March, another report showed today, marking a seventh year of deflation in Japan and making it less likely the central bank will raise key interest rates from almost zero. Core prices, which exclude fresh food, fell 0.3 percent from a year earlier, the government's statistics bureau said.

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April 26 (Bloomberg) -- Honda Motor Co., Japan's third- largest carmaker, forecast an end to its four-year run of record profits because of derivatives losses of as much as 63 billion yen ($595 million) and lower earnings from Asian affiliates.

Net income may drop 7.4 percent to 450 billion yen in the year ending March 2006, from last year's record 486.2 billion yen, the Tokyo-based carmaker said today. Honda's efforts to hedge against changes in foreign exchange, interest rates and shares may cause the loss, based on current market conditions, said Honda's Senior Managing Director Satoshi Aoki.

Honda may become more dependent on the U.S., where it earns up to 64 percent of annual operating profits, as sales growth slows in China, the world's third-largest vehicle market. President Takeo Fukui, 60, will put Honda's second-most popular vehicle model, a redesigned Civic compact car, on sale in the U.S. in the second half and expand production in Alabama.

``The numbers look weak,'' said Credit Suisse First Boston's Tokyo-based analyst Koji Endo, who said the stock may outperform rivals. ``Since Honda tends to be conservative, there is room for the outlook to be revised upwards and we can expect U.S. sales to rise.''

The projected loss would follow a profit of 55.5 billion yen from derivatives in the 12 months ended March, including a 52 billion yen gain on interest rate contracts and 21 billion yen on equity contracts. Derivatives are financial obligations whose value is derived from underlying assets such as debt and equity securities, currencies and commodities.

``Our global operations deal with many derivatives,'' Aoki said today at a Tokyo press conference. ``This year we aren't counting on it, that's why we are subtracting it from our books.''

Honda's shares, which have risen 10.4 percent in the past 12 months, fell 1.5 percent today to 5,190 yen in Tokyo before the carmaker reported its earnings. The stock performed better in the past 12 months than the 6.6 percent drop in the key Topix index and better than larger rival Nissan Motor Co.'s 17.6 percent decline.

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Oct. 6 (Bloomberg) -- Japanese government bonds will drop for a second straight quarter, the first six-month decline since 2003, as the world's second-largest economy emerges from more than a decade of stagnation, according to a Bloomberg survey of the nation's biggest bond traders.

The Bank of Japan gave bond investors more reason for concern on Oct. 3 when its most-watched gauge of manufacturing showed business managers are growing more confident. The Tankan survey indicated the economy has become ``fully sustainable,'' Bank of Japan Governor Toshihiko Fukui told a government panel in Tokyo just after the report was released.

The 10-year government bond will yield 1.55 percent at year- end, up from 1.475 percent on Sept. 30, the median forecast of Japan's 27 primary dealers showed. The survey indicates the firms, chosen by the Ministry of Finance to discuss government borrowing, are more bullish on the economy than they were in June and expect seven years of deflation to end.

``Japan's growth prospects look more promising and we are on the threshold of an end to deflation,'' said Masuhisa Kobayashi, chief government bond strategist in Tokyo at Barclays Capital Japan Ltd., a primary dealer. ``Yields are set to increase.''

Kobayashi recommended investors buy inflation-linked bonds that pay principal adjusted for the consumer price index because that indicator may turn positive after November. The monthly gauge of core consumer prices excluding fruit and vegetables, the BOJ's preferred inflation measure, rose only once since April 1998.

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(TOKYO) Japan's government believes that the economy is recovering moderately, despite data showing the country fell into a shallow recession last year, and has dropped concerns about a higher yen.

While keeping most of the monthly report unchanged, the government downgraded its assessment on personal consumption, which accounts for some 55 per cent of economic activity.

'The economy is recovering at a moderate pace, while some weak movements continue to be detected,' the February report said, keeping the same assessment for the third straight month.

Reflecting the yen's pullback from five-year highs against the dollar, the reference to currency rates was dropped from the February report.

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Feb. 1 (Bloomberg) -- Japanese workers' wages had the biggest gain in 18 months in December, signaling consumer spending may support growth in the world's second-largest economy.

Wages, which include overtime, commuting costs and bonuses, rose 1.6 percent last month from a year earlier, the Ministry of Health, Labor and Welfare said in a report released in Tokyo today. The gain was the biggest since June 2003.

Higher incomes for Japanese consumers, whose spending accounts for more than half of the economy, is reducing the nation's reliance on overseas and corporate demand as a source of growth. The surge in stock prices since the start of last year is another factor that will support consumer spending in the coming year, according to Satoru Ogasawara.

``The improvement in jobs and wages means we can expect spending to be pretty good this year,'' said Ogasawara, an economist at Credit Suisse in Tokyo. ``High stock prices have also boosted the value of consumer assets, supporting consumption.''

Wages rose for the fourth month in December, marking the longest expansion since October 1997, when they increased for ten straight months. They rose 0.6 percent in 2005, the first gain in five years. Bonuses, which also include reimbursement for commuting costs, rose 2.1 percent, the first increase in 8 years, today's report said.

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Feb. 25 (Bloomberg) -- Japanese consumer prices fell in January at the fastest pace since May, making it less likely the central bank will end its zero interest-rate policy.

Core prices, which exclude fresh food, fell 0.3 percent from a year earlier led by rice costs and telephone charges, the government's statistics bureau said today in Tokyo. The measure follows a 0.2 percent drop in December. Japan is headed for its seventh straight year of deflation.

Bank of Japan Governor Toshihiko Fukui yesterday repeated a vow to keep the zero-rate policy until core prices stop falling and show stable gains. The decline is the latest indication that the world's second-largest economy is faltering after government reports this month showed Japan fell into recession last year and export growth slowed in January.

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