Nikkei rises, drug shares gain on merger news

By Staff
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Google Oneindia News

Tokyo, Jan 18: The Nikkei average swung into positive territory on Thursday, led by gains in drug stocks on consolidation hopes after Tanabe Seiyaku Co. Ltd. said it was considering a merger with a rival.

But investors sold technology stocks following a 0.74 percent drop in the U.S. Nasdaq and after shares of Apple Inc. slipped in after-hours trading on its outlook for the current quarter, which lagged analysts' expectations.

The market is also awaiting a decision from the Bank of Japan on interest rates. Governor Toshihiko Fukui is due to hold a news conference at 3:30 p.m. (0630 GMT).

''The drug stocks are up due to investors' expectations of consolidation in the industry following a newspaper report,'' said Tsuyoshi Nomaguchi, strategist of Japanese equity research at Daiwa Securities.

''Although the Bank of Japan's meeting is today's main event, the market has already factored in the possibility of rate hikes in February instead this month.'' Expectations that the central bank will raise interest rates this week retreated sharply on Wednesday after media reports that such a move was unlikely, sending debt prices higher and the yen lower.

The reports surprised investors who had thought a rate increase to 0.50 percent from the current 0.25 percent was virtually certain at the BOJ's two-day policy meeting that ends on Thursday.

The BOJ's policy meeting normally ends sometime between noon (0300 GMT) and 1 p.m. (0400 GMT) but when policy changes are made, it has tended to last until around 2 p.m. (0500 GMT).

The tech-sensitive Nikkei was up 0.62 percent or 107.44 points at 17,368.79 as of 0129 GMT.

The TOPIX index rose 0.47 percent to 1,714.84 after hitting its highest point since May on Wednesday.

Tanabe Seiyaku Co. Ltd. was up 4.9 percent to 1,708 yen after the company said on Thursday morning that it is in merger talks with Mitsubishi Pharma Corp., but that nothing had been decided.

The Nikkei newspaper reported earlier that Mitsubishi Chemical Holdings Corp.'s drug unit Mitsubishi Pharma and Tanabe Seiyaku are in the final stages of talks to merge.

Mitsubishi Chemical Holdings added 4.9 percent to 810 yen.

Chip-gear maker Tokyo Electron Ltd. shed 0.7 percent to 9,210 yen.

Advantest, the world's largest maker of tools used to test microchips, lost 0.2 percent to 6,620 yen.

REUTERS

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