Monday, 5 December 2005

Japanese capital spending up 9.6 percent in 3rd quarter

Japan's third quarter GDP should get another boost from today's report on capital spending. From Bloomberg:

Japan's capital spending rose at the fastest pace in a year in the third quarter, led by property developers, suggesting the government may raise its economic growth estimate.

The broadest measure of investment climbed 9.6 percent from a year earlier, the Ministry of Finance said in Tokyo today, higher than the 6.8 percent median forecast of seven economists in a Bloomberg survey. Spending by developers had the biggest increase, surging by surged 74 percent.

Investors apparently like the reading.

The Nikkei 225 Stock Average climbed 0.8 percent to 15,551.31 at the close in Tokyo, the highest since Oct. 10, 2000. The yield on the benchmark 1.5 percent bond due Dec. 2015 rose 5.5 basis points to 1.56 percent, the highest since Nov. 14.

But the stock market also got a boost from the yen, which fell despite the reading on capital spending. From another Bloomberg report:

The yen fell to a 32-month low against the dollar after Japanese Finance Minister Sadakazu Tanigaki and Bank of Japan Governor Toshihiko Fukui signaled they are comfortable with the currency's 15 percent drop this year.

Japan's currency also declined to a record versus the euro after Fukui told reporters in London on Dec. 3 a weaker yen is "not a problem" and Tanigaki said the slide reflects relative economic performance. The yen is set for the biggest annual drop against the dollar since 1979 as the BOJ keeps rates near zero and the Federal Reserve lifts rates at a "measured" pace...

Against the dollar, the yen fell to 121.15 at 9:51 a.m. in London from 120.60 in New York on Dec. 2, according to electronic currency trading system EBS. The yen weakened to 141.77 per euro from 141.30. The dollar traded at $1.1702 versus the euro, from $1.1717.

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