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Japan Stocks Swing Between Gains, Losses Before Bernanke Speech

Japan Stock Futures Fall on U.S. Job Claims
A report yesterday showed U.S. jobless claims rose by 5,000 to 417,000 last week. Photographer: David Paul Morris/Bloomberg

Japanese stocks swung between gains and losses as investors awaited a speech by Federal Reserve Chairman Ben S. Bernanke today in Jackson Hole, Wyoming for clues about further stimulus to the weakening U.S. economy.

AOC Holdings Inc. declined 3.8 percent after crude oil prices dropped and Mitsubishi UFJ Morgan Stanley Securities Co. cut its investment rating on the energy explorer. Kyowa Hakko Kirin Co. surged 3.8 percent after the drugmaker said it plans to buy back shares. Elpida Memory Inc., a chipmaker that has lost almost half its value this year, surged 11 percent.

The Nikkei 225 Stock Average dropped 0.1 percent to 8,763.22 as of 12:48 p.m. in Tokyo, after rising as much as 0.2 percent. The broader Topix index rose 0.1 percent to 752.60. For the week, the Nikkei has risen 0.5 percent, while the Topix edged up 0.1 percent.

“Investors are in a holding pattern before the meeting,” said Hitoshi Asaoka, senior strategist in Tokyo at Mizuho Trust & Banking Co., a unit of Japan’s second-largest bank. “Nobody knows what the actual outcome will be and everything is speculation at this point, so it’s difficult for investors to take a clear position.”

Japan’s parliament passed two pieces of legislation today that Prime Minister Naoto Kan has said were conditions for him to resign, setting up a succession battle that will play out by early next week. Kan will give a news conference at 6 p.m. today in Tokyo, Kyodo news reported.

Jackson Hole

Futures on the Standard & Poor’s 500 Index gained 0.5 percent today. The index fell 1.6 percent in New York yesterday with declines intensifying as Germany’s DAX Index plunged 4 percent in 15 minutes. Traders sold German equity futures to hedge their investments before France, Italy and Spain extended curbs on short selling.

Investors are waiting for Bernanke to give some indication of whether the central bank will offer further economic stimulus. Bernanke triggered a 28 percent rally in the Standard & Poor’s 500 Index last year at the same conference when he hinted the Fed would buy more bonds to prop up the economy.

Trading volume today was below average as of the midday break. The value of shares traded on the first section of the Tokyo Stock Exchange was 434 billion yen ($5.6 billion), about one-third of this year’s daily average of 1.4 trillion yen.

U.S. Jobs

The Topix has lost about 12 percent this month amid concern U.S. growth is slowing and Europe’s debt crisis will damage the banking system, damping demand in two of Japan’s biggest export markets. The decline has cut the price of shares on the index to 88 percent of book value, the lowest since March 2009.

Jobless claims in the U.S. unexpectedly climbed by 5,000 to 417,000 in the week ended Aug. 20, a report showed yesterday. Economists projected claims would drop to 405,000.

Data today may indicate the world’s biggest economy expanded 1.1 percent in the second quarter, less than a previous estimate of 1.3 percent, according to the median of 81 forecasts in a separate survey.

Oil fell from a two-day high in New York, trimming the first weekly gain in five, as investors bet that signs of a slowing economy in the U.S. indicate fuel demand may falter in the biggest crude-consuming nation.

AOC Holdings Inc. lost 3.8 percent to 426 yen after Mitsubishi UFJ Morgan Stanley Securities cut its investment rating on the company to “neutral” from “outperform,” citing a delay in starting production at the oil explorer’s Norwegian Yme field in the North Sea. The brokerage also lowered the stock price target to 480 yen from 680 yen.

Kyowa Hakko, Elpida

Kyowa Hakko Kirin, the drugmaker majority owned by Kirin Holdings Co., climbed 3.8 percent to 789 yen as the company plans to buy back as much as 4.39 percent of its outstanding shares for up to 20 billion yen between Aug. 26 and Feb. 29, according to a statement.

Elpida Memory gained 11 percent to 507 yen. The rally may have been triggered by a rise in the price of dynamic-random-access-memory chips used to help personal computers juggle multiple programs, said Tsuyoshi Segawa, a strategist at Mizuho Securities Co. in Tokyo. The spot price of some DRAM chips rose 3.2 percent yesterday, the first gain in almost five months, according to Taiwan-based Dramexchange.

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