Tuesday, January 29, 2008

Nikkei 225 Futures Climb on Speculation Fed to Lower Rates

By Patrick Rial

Jan. 29 (Bloomberg) -- Japan's Nikkei 225 Stock Average futures climbed on speculation the U.S. Federal Reserve will lower interest rates by a half point this week, to prop up the world's biggest economy and Japan's largest export market.

Mizuho Financial Group Inc.'s U.S.-traded receipts surged 4 percent from the closing share price in Tokyo yesterday. Those of Mitsubishi Corp. climbed after prices for commodities including gold and nickel advanced. Nippon Electric Glass Co. may rise today after boosting its profit forecast.

``There really isn't a reason to be as pessimistic as the recent mood in the market has suggested,'' Terunobu Kinoshita, who helps manage $785 million at Fund Creation Co. in Tokyo, said in an interview with Bloomberg Television. ``That being said, we can expect volatile swings to continue.''

U.S. stocks rallied yesterday with the Standard & Poor's 500 Index jumping 1.8 percent.

Nikkei 225 Stock Average futures expiring in December last traded in Chicago at 13,500, up from the close of 13,050 in Osaka, Japan, and 13,035 in Singapore yesterday. The Bank of New York Japan ADR Index, which tracks the region's American depositary receipts, added 0.4 percent.

Stocks may also rise after reports showed Japan's unemployment and consumer spending data were better than forecast.

Mizuho is Japan's third-largest lender by market value. Receipts of Mitsubishi Corp., which generates more than half of its profit from commodities dealing, surged 3.4 percent. Those of Sharp Corp., Japan's largest maker of liquid-crystal display televisions, jumped 3.8 percent.

Fed Funds Futures

Traders see an 86 percent chance the Fed will cut its benchmark lending rate to 3 percent from 3.5 percent on Jan. 30, according to Fed funds futures. That's up from 70 percent on Jan. 25. Lower interest rates may help pull the U.S. economy out of a possible recession sparked by the deteriorating housing market.

Prices for gold, platinum and coal rallied to records yesterday. A measure of six metals traded on the London Metal Exchange, including copper and zinc, added 0.4 percent.

Nippon Electric Glass, the world's No. 3 supplier of glass for LCD televisions, may advance after boosting its net income forecast for the year ending March 31 by 16 percent yesterday.

Fanuc Ltd., the world's largest maker of industrial robots, may gain after saying third-quarter profit jumped 23 percent.

``Our impression of results is slightly positive,'' Teruhiko Nishimura, an analyst at Credit Suisse Group in Tokyo, wrote in a note to clients. ``We forecast the factory automation and robot segments will generate strong auto industry-related sales.''

Japan's unemployment rate held steady at 3.8 percent in December, the government said 30 minutes before the start of trading. Household spending jumped 2.2 percent from the previous year. Economists had forecast the jobless rate to rise and spending to slip in December.

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