Tokyo stocks seen down after election, Wall Street

Tokyo, July 30: Tokyo stocks are likely to open lower on Monday, after Prime Minister Shinzo Abe's ruling coalition suffered a crushing defeat in an upper house election on Sunday and U.S. stocks plunged on Friday on credit concerns.

In the election for Japan's upper house, where half of the 242 seats were up for grabs, Abe's Liberal Democratic Party alone won 37 seats, media said, worse than the loss in 1998 that forced Ryutaro Hashimoto to resign as prime minister.

The main opposition Democratic Party will now have the most seats in the upper chamber, while Abe's coalition remains in control of the more powerful lower chamber. As a result, laws will be hard to enact, threatening policy deadlock, and that may be negative for the stock market, said Norihiro Fujito, general manager at Mitsubishi UFJ Securities Co. Ltd.'s investment research and information division.

''The current government is now a so-called lame-duck government, and it's unlikely that they could carry out structural reforms,'' he said.

But Fujito added the credit concerns in the U.S. market will be a much bigger factor for Japanese stocks.

''I would say that the election will not be much of a factor,'' he said. ''The money that had sought high risk and high returns is shrinking, and tightening credit conditions are making it difficult to do leveraged buyouts.'' Market participants expect the Nikkei to trade between 16,900 and 17,100 on Monday. The benchmark ended at 17,283.81 on Friday.

On Friday, the Dow Jones industrial average fell 1.5 percent to 13,265.47 and the Nasdaq Composite Index was down 1.4 percent at 2,562.24.

Nikkei futures traded in Chicago finished the previous session at 17,020.00, below the Osaka close by hefty 270 points, pointing to a lower opening.

Other analysts noted that the yen's appreciation against the dollar will also weigh on the the market.

A raft of earnings are scheduled to come out later in the day, including Nippon Steel Corp, JFE Holdings Inc, Mitsubishi Motors Corp., Sanyo Electric Co and Kyocera Corp.

Stocks to Watch

-- Toshiba Corp., Toshiba, the world's No. 2 maker of flash memory chips, posted a 1.6 percent rise in quarterly operating profit on Friday and raised its first-half forecast as chip prices recover.

-- Mitsubishi Motors Corp. T> Mitsubishi Motors will likely post a group operating profit of 3 billion to 5 billion yen for the April-June quarter, compared with a loss of 6.8 billion yen in the same quarter a year earlier, as it benefitted from a weaker yen, the Nikkei business daily reported on Saturday.

-- NTT DoCoMo Inc., NTT DoCoMo, Japan's largest mobile phone operator, posted a 25 percent fall in quarterly operating profit on Friday due to higher costs to sell handsets and the impact of a change in how it accounts for sales.

-- Seiyu Ltd., Seiyu, the Japanese unit of Wal-Mart Stores Inc., will post an operating loss for the first half of the year as weak sales sidelined its forecast return to profit, the Nikkei business daily said on Friday.

-- Sumitomo Mitsui Financial Group Inc. (SMFG) T> SMFG said on Friday that its net profit was roughly flat in the first quarter and stuck by its forecast for an earnings rebound for the full year, helped by an improvement in its bond portfolio and strong sales of investment trusts.

Separately, SMFG also said it would buy a 32 percent stake in credit card firm OMC Card Inc. from retailer Daiei Inc. for about 75 billion yen to boost its consumer finance business.

-- Eisai Co. Ltd.

Japanese drug maker Eisai said on Friday it had bought the rights to develop and market Sepracor Inc.'s Lunesta insomnia treatment in Japan.

--Fuji Film Holdings Corp T> Fujifilm Holdings said on Friday its quarterly profit nearly quadrupled, driven by robust sales of its medical equipment and flat panel display parts, and it raised its outlook for the fiscal first half.

-- Tokyo Electron Ltd. T> The world's second-biggest chip gear maker posted a 66 percent rise in operating profit on a backlog of orders from Taiwanese chip makers, and it kept its full-year outlook.

-- Softbank Corp., Nippon Telegraph and Telephone Corp. (NTT) T> Softbank will launch a Internet Protocol phone service using a fibre-optic network in August, aiming to lure customers away from rival NTT, the Nikkei business daily reported on Sunday.

-- NEC Corp. T> NEC plans to acquire Sphere Communications, a U.S.

communications software firm, for about 5 billion yen to boost overseas sales of its office information systems, the Nikkei business daily reported on Sunday.

-- Kyocera Corp. T> Kyocera has sold the trademark rights of Yashica Co., a camera maker it acquired in 1983, to Hong Kong-based JNC Datum Tech International Ltd., finalising its withdrawal from the digital camera business, the Nikkei business daily reported on Sunday.

Reuters>