Tokyo: Japan’s Nikkei average climbed 0.4% on Monday after earlier hitting a 26-year low, buoyed by tech shares such as Sony Corp and a slightly weaker yen as investors pinned their hopes on government policy steps.
But shares of Mitsubishi UFJ Financial Group and other large banks weighed on the market amid general gloom about the global economy, hit by concern they may need to raise billions of dollars each to offset hefty losses on their stock portfolios.
The benchmark Nikkei fell as far as 7,486.44, its lowest since 1982 - when Ronald Reagan was US president and Sony Corp introduced the first CD player.
It ended the morning up 30.42 points at 7,679.50, while the broader Topix was down 1.5% at 794.45.
Market players said they were waiting for the announcement of government steps to brake the relentless fall in Japanese share prices, which has seen the Nikkei lose 32 % so far this month and 50% this year, although expectations were mixed.
“We need something that surprises the market in a good way, perhaps something like the government intervening to sell yen in the currency market,” said Masayoshi Okamoto, head of dealing at Jujiya Securities.
“If we don’t have something like this, today’s low - the 26-year low - won’t be significant at all.”
The yen relinquished some early gains against the dollar after climbing back near a 13-year peak against the US currency, and Japanese Finance Minister Shoichi Nakagawa said he was watching the currency market with great interest, suggesting that Japan may be getting closer to considering intervention.
The Nikkei business daily had reported on Sunday that the government would announce additional steps to stabilise financial markets before the start of trade on Monday.
Tokyo is considering banning so-called naked short-selling and introducing a rule requiring stock investors to disclose massive short-selling transactions, the Nikkei said.
“We need something more than what was in the Nikkei. That might help stop stocks from sliding, but it certainly wouldn’t help them recover much,” Okamoto added.
Nakagawa is set to meet with Prime Minister Taro Aso and ruling party policymakers from 11:30amto discuss the economic and financial situation surrounding Japan.
Many market players were wary.
“The announcement of such economic steps may have effects but whether those will be strong enough to turn the current market trend upward still needs a careful assessment,” said Fumiyuki Nakanishi, chief strategist at SMBC Friend Securities.
Banks dragged on the Nikkei, with Mitsubishi UFJ down more than 13% at one point after people familiar with the matter said the bank, Japan’s top lender, is considering raising up to 1 trillion yen ($10.8 billion) to shore up its capital.
Mizuho Financial Group, Japan’s second-largest bank, and third-ranked Sumitomo Mitsui Financial Group are both looking to raise as much as 500 billion yen ($5.4 billion), newspapers reported on Monday.
Mitsubishi UFJ was down 11.1% at 607 yen, while Mizuho lost 8 percent to 248,300 yen and Sumitomo Mitsui shed 10.6% to 389,000 yen.
This downward pressure was countered, though, by gains in tech shares, especially Hitachi Ltd and Sony Corp
Hitachi rose 3.9% to 430 yen after the electronics conglomerate lifted its half-year profit forecast by 58% on a stronger-than-expected information technology business, bucking falls in electronics makers that have been hit by a weakening global economy and a firmer yen.
Sony was up 2.9% at 2,030 yen after Chief Executive Howard Stringer said on Monday the electronics maker intends to keep its performance targets for the year to March 2011, which includes hitting a return on equity of 10 percent.