2 June 2004, 09:58  Tokyo stocks fall, oil jitters weigh on exporters

Japanese stocks dipped by mid-afternoon on Wednesday as a spike in oil prices hit some exporters, while banks were dragged down by a slump in UFJ Holdings Inc <8307.T>. The benchmark Nikkei average <.N225> fell 0.46 percent to 11,245.07 by 0501 GMT, erasing most of the previous day's 0.54 percent gain. The broader TOPIX index <.TOPX> lost 0.60 percent to 1,137.35. Record high oil prices are sending a chill through market sentiment, making investors worry about their impact on the global economy and companies' business prospects, analysts said.
During Asian trading hours, NYMEX crude oil futures hit a record high of $42.45 a barrel, exceeding previous record levels marked in New York overnight, on fears of supply disruptions after a weekend attack by suspected al Qaeda militants in Saudi Arabia. "Higher oil prices do affect the global economy and investors were very nervous because they can't imagine how much higher (oil prices) may go from the current level," said Tsuyoshi Nomaguchi, a senior strategist at Daiwa Securities. "Many are expecting oil prices to retreat after the OPEC meeting, but nothing is certain," he said. The Organisation of Petroleum Exporting Countries (OPEC) is set to meet in Beirut on Thursday, and is expected to discuss raising output. Exporters wilted on concern over the impact of higher oil prices on global economic health. Nissan Motor Co <7201.T> extended losses into a seventh straight sessions, losing another 1.9 percent to 1,084 yen, the lowest intraday level since mid-February. Semiconductor testing devices maker Advantest Corp <6857.T> fell 2.25 percent to 7,370 yen as investors waited for chip giant Intel Corp's updated financial forecasts for the second quarter due on Thursday. Friday's release of monthly U.S. jobs data is also eagerly awaited in the market as it is expected to give a clue about when and by how much the Federal Reserve may raise interest rates from a four-decade low of one percent. UFJ Holdings, the sole loss-making bank among Japan's top four banks, tumbled 4.83 percent to 512,000 yen, extending losses into a seventh straight session after the bank posted an annual net loss last week. Adding fuel to the selling, Goldman Sachs on Tuesday removed UFJ from its Current Investment List, saying the stock was likely to tread water until the end of September, by which time the bank has vowed to find a way to dispose of the bulk of its problem loans. Mizuho Financial Group <8411.T> was down 1.47 percent at 468,000 yen, dragging down the banking sector's sub-index <.IBNKS.T> by 1.63 percent and making it the worst performing sector. "People have started selling banks as a whole because of the uncertainty surrounding UFJ," said Yoshihiko Kamata, banking analyst at Nomura Securities.
Bucking the market's bearish trend, oil developer and refiner AOC Holdings <5017.T> surged 14.9 percent to 771 yen. The Yomiuri Shimbun newspaper said on Wednesday that Arabian Oil, a Japanese oil developer under the AOC umbrella, planned to launch a joint venture in southern Iraq to rehabilitate damaged oil production and port facilities.///

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