25 August 2003, 11:30  Yen firm after Japan data, shares mixed

SINGAPORE, Aug 25 - The yen was firm against the dollar and the euro on Monday after Japan reported strong trade data and Tokyo shares seesawed, pressured by the currency's strength but boosted by prospects of growth in the economy. Other Asian stock markets were mixed while gold was steady in Asian trade, with support from Japanese buying on the strong yen. Crude oil held steady following last week's gasoline-led rally. Trade was thin as Monday was a bank holiday in London. Japan's Nikkei index <.N225> closed virtually flat at 10,276.64 points after gains in early trade and then some sharp losses. It lost 0.79 percent on Friday but was up 4.2 percent on the week.
"It's the second day investors have locked in profits," said Tatsuyuki Kawasaki, director of equities trading at Kaneyama Securities. "But the market is showing resilience at around 10,200 (points) as investors continue looking for laggards." Bosch Automotive Systems <6041.T>, a fuel injection-pump maker affiliated with Germany's Robert Bosch [ROBG.UL], soared almost 19 percent to 504 yen after the company raised its half-year group net profit forecast on Friday by 75 percent. Honda Motor Co Ltd <7267.T> and some other blue-chip auto and technology exporters fell, tracking Wall Street and because of the yen's strength. Brokerages succumbed to profit-taking and the broader TOPIX index <.TOPX> closed down 0.64 percent.
"Investors have clearly been put off by the yen's sharp climb against the euro," said Tsuyoshi Segawa, equity strategist at Shinko Securities. Ito-Yokado Co Ltd <8264.T> led the retail sector lower after Asia's biggest retail group joined rivals Aeon Co <8267.T> and Seiyu Ltd <8268.T> in revising down six-month earnings estimates on Friday, blaming unseasonably cool summer weather in Japan. "While Ito-Yokado's downward revision was expected, the amount of the drop was quite large, triggering a sell-off after last week's big gains," Segawa said.
OTHER MARKETS MIXED
Stock markets in Australia <.AXJO>, Singapore <.STI>, India <.BSESN> and New Zealand <.NZ40> were down, tracking Friday's 0.79 percent fall in the Dow <.DJI>. Hong Kong <.HSI>, Korea <.KS11>, the Philippines <.PSI>, Taiwan <.TWII> and Malaysia <.KLSE> were up. Japan announced trade data for July on Monday that showed the country's trade surplus rose by 7.3 percent from the same month last year. The number further boosted the yen, which has been basking in the glow of higher economic growth predictions for a few weeks. The euro was trading at 127.78/81 yen at 0545 GMT, marginally softer on the day and within a half yen of five-month lows set on Friday. The dollar was bobbing around 117.50 yen , within a quarter yen of one-month lows around 117.30 set on Friday. "Good economic prospects are more evident in the United States, but I think demand for the yen is strong because bullish Japanese data is more of a surprise since the image of Japan's deflation has been strong," said Kosuke Hanao, head of forex sales at Royal Bank of Scotland.
But few players were eager to buy up the yen further due to wariness that Japanese authorities may intervene. Some said they thought the Bank of Japan might have stepped in on Friday when the yen firmed to multi-month highs. "I think they are pretty committed in defending 117 yen," said a spot dealer at a U.S. bank. U.S. bond prices fell on the strong yen and yields on the benchmark 10-year Treasury note were around 4.48 percent, up slightly from 4.47 percent in New York on Friday.//

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