Markets on a tear; Dow 13,000 in sight

Wall Street faces a second big week of earnings, housing data

Updated: 3:53 p.m. ET April 22, 2007

NEW YORK - The Dow Jones industrial average is now perched below the 13,000 mark, lifted last week by surprisingly strong earnings reports. If this week’s reports follow that trend, investors may send the index hurtling past that milestone.

So far, 16 of the 30 Dow component companies have released earnings from the first three months of the year, and 10 have beaten expectations. This week, six more Dow components report results, including Exxon Mobil Corp., which in 2006 posted the largest annual profit by a U.S. company, and Microsoft Corp., which investors will be eyeing for clues about the potential of the technology sector.

But while the Dow is back in record territory, and the Standard & Poor’s 500 and Nasdaq composite indexes are at their highest levels in more than six years, many market watchers are skeptical about Wall Street’s ability to extend last week’s streak with the same vigor. Volatility remains higher than it was before the stock plunge on Feb. 27 that sent the Dow tumbling 416 points, and although the market has recovered its losses, many of the same concerns that took the market down two months ago remain: high inflation, a weakening dollar and a slow housing market.

Investors will have a good deal of housing data to examine this week. Recently, reports have shown that the housing market is still tepid, but more resilient than many investors expected, suggesting that the troubles with subprime mortgages aren’t affecting the broader lending industry, and that homeowners won’t feel the need to rein in spending.

On Tuesday, the National Association of Realtors reports sales of existing homes in March. The market expects that 6.50 million existing homes were sold, down slightly from 6.69 million in February, according to the median forecast of economists surveyed by Thomson Financial. Also Tuesday, Standard & Poor’s releases its February index of home prices.

On Wednesday, the Commerce Department reports on new home sales in March. Economists predict that 851,000 new homes were sold in March, compared with 848,000 a month earlier.

Last week, benign inflation data also helped stocks surge. The Dow rose 2.77 percent, the S&P 500 rose 2.17 percent, and the Nasdaq rose 1.38 percent.

Another week of earnings
AT&T Inc. releases its earnings from the first quarter Tuesday. Analysts surveyed by Thomson expect the company to report profit of 61 cents per share. The phone company closed at $39.87 Friday, at the upper end of its 52-week range of $24.72 to $39.90.

Boeing Co.’s quarterly earnings come out Wednesday, and analysts expect the aerospace manufacturer to report profit of $1.02 per share. Boeing closed at $93.29 last Friday, at the high end of its 52-week range of $72.13 to $94.75.

Apple Inc.’s results also come out Wednesday and are expected to show quarterly profit of 64 cents per share. Apple closed at $90.97 Friday, at the upper end of its 52-week range of $50.16 to $97.80.

Thursday will bring Microsoft’s and ExxonMobil’s earnings. Microsoft’s profit is expected to be 46 cents per share. The software maker closed at $29.02 Friday, in the upper half of its 52-week range of $21.45 to $31.48.

ExxonMobil is expected to post a profit of $1.51 per share. The oil company closed at $79.86 Friday and set a fresh 52-week high of $79.80. Its previous high was $79.

Economic data rolls in
On Tuesday, the Conference Board releases its April index of consumer confidence. The market expects the index to slip to 105.7 from 107.2 in March, according to the median forecast of economists surveyed by Thomson Financial.

On Wednesday, the Commerce Department reports on orders of durable goods. Economists forecast that durable goods rose 1.1 percent in March, slightly faster than 1.0 percent in February.

Also Wednesday, the Federal Reserve releases its Beige Book, which details economic activity in various U.S. regions.

On Friday, the University of Michigan revises its index of consumer sentiment in April, and the Commerce Department releases its first estimate of first-quarter gross domestic product. Economists are anticipating GDP growth of about 2.0 percent, down from 2.5 percent in the fourth quarter.

Next week will also bring regional manufacturing indexes from the Chicago, Richmond and Kansas City Federal Reserve banks, and a speech in New York on Friday from San Francisco Fed President Janet Yellen.

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The Dow Jones industrial average closed above 12,800 for the first time Wednesday

NEW YORK - The Dow Jones industrial average closed above 12,800 for the first time Wednesday, signaling Wall Street's recovery from its steep decline in February as investors rewarded companies with strong earnings.

The day was not a standout for the overall market, however. Technology stocks lagged following disappointing earnings from leaders including Yahoo Inc. (Nasdaq:YHOO - news)

The Dow moved as high as 12,838.46 before slipping back slightly to close at 12,803.84, up 30.80, or 0.24 percent. The Dow broke records set on Feb. 20, one week before the average tumbled 416 points in a worldwide selloff.

As only 11 of the 30 stocks in the blue chip index advanced, the Dow's gain Wednesday came from strength in stocks like JP Morgan Chase & Co., Boeing Co. and Caterpillar Inc.

JPMorgan lifted the Dow after the bank reported a 55 percent jump in profits that far surpassed Wall Street's expectations. The companies that make up the Dow — nearly half of which report earnings this week — have been mostly beating the Street's predictions.

Broader stock indicators finished mixed. The Standard & Poor's 500 index rose 1.02, or 0.07 percent, to 1,472.50, but the Nasdaq composite index fell 6.45, or 0.26 percent, to 2,510.50.

Bond prices rose for the third straight session as investors grew optimistic that the
Federal Reserve won't raise interest rates. The yield on the benchmark 10-year Treasury note fell to 4.66 percent from 4.69 percent late Tuesday. Gold prices also advanced.

Investors pulled back from tech stocks after Yahoo posted a surprising 11 percent drop in its first-quarter profit. Disappointing results from International Business Machines Corp. and Motorola Inc. added to the selling.

Mike Malone, a trading analyst at Cowen & Co., said results from Yahoo stunted some of the market's appetite for technology issues. However, he dismissed the notion that Yahoo's earnings marked the start of a trend for first-quarter reports.

"There have been some company-specific issues out there, but they really aren't indicative of the underlying earnings environment," he said.

Wall Street was uneasy about a sharp drop in the dollar, which is now at 26-year lows against the British pound and a two-year low against the euro. The U.S. currency has weakened because interest rates have remained steady since the summer and amid signs of a slowing U.S. economy.

Light, sweet crude settled up 3 cents at $63.13 per barrel on the New York Mercantile Exchange as a government report showed a bigger-than-expected decline in gasoline inventories. The U.S. Energy Information Administration said stockpiles dropped 2.7 million barrels to 197 million barrels.

Charlie White, chief investment officer of the ThomasLloyd Funds, said that while overall earnings have been good, investors appear to still be waiting further signs about where the economy is headed.

"It's one of these periods of time that you don't have any compelling evidence either way and what you need to do is stay focused and be patient," he said. "I ask myself the question, 'Is this the beginning of a leg up in a bull market, or is this a last gasp?'"

Investors are focused on earnings reports as they look for a direction in stocks. S&P has predicted earnings for companies in the S&P 500 grew less than 4 percent in the first quarter, much less than in previous quarters.

Yahoo plunged $3.78, or 11.8 percent, to $28.31 after the Internet portal reported disappointing results late Tuesday. The results left Wall Street wondering how much longer it will take the company to regain its financial footing after it stumbled through most of 2006.

Pressure was felt elsewhere in the tech sector. IBM posted disappointing results late Tuesday, and its shares dropped $2.32, or 2.4 percent, to $94.80. Hard driver maker Seagate Technology LLC fell 85 cents, or 3.8 percent, to $21.30 after it reported profit fell 22 percent in the first quarter, and lowered its forecast.

Motorola reported a first-quarter loss due to sluggish sales, and charges to cover a legal settlement and restructuring efforts. However, sales surpassed expectations and the stock rose 27 cents to $18.22.

Medical device maker Abbott Laboratories Inc. fell 97 cents to $58.03 after it said its first-quarter profit fell 19 percent. The results excluding certain items, however, beat analyst estimates.

JPMorgan rose $1.89, or 3.8 percent, to $52.07 after the nation's third-largest bank reported a 55 percent increase in profits. The New York-based bank said first-quarter results were boosted by strength across its primary business lines, though it did increase reserves to offset subprime mortgage losses.

Declining issues led advancers 9 to 7 on the
New York Stock Exchange, where consolidated volume came to 2.93 billion shares compared with volume of 2.89 billion shares traded Tuesday.

The Russell 2000 index of smaller companies fell 4.58, or 0.55 percent, to 824.38.

Overseas, Japan's Nikkei stock average closed up 0.80 percent. Britain's FTSE 100 finished down 0.74 percent, Germany's DAX index fell 0.90 percent, and France's CAC-40 dropped 0.38 percent.

South Korean and Australian stocks hit new records Wednesday, while the sometimes-volatile Shanghai Composite index edged up 0.01 percent. It was a nearly 9 percent drop in the Shanghai Composite index on Feb. 27 that helped trigger the day's global selloff. Indexes like the Shanghai Composite, however, took less time to resume hitting highs than did major U.S. indexes.

___

On the Net:

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

Japan's Savers May Be Ready to Spend, Keeping Economy Growing

Japan's Savers May Be Ready to Spend, Keeping Economy Growing

By Jason Clenfield

April 16 (Bloomberg) -- Hiroko Kobayashi, a 65-year-old grandmother from Nagoya, Japan, says she's starting to feel a little more comfortable about spending now that the bank pays her more interest.

``If I can earn a little money on my savings, it'll mean I can go out and get a few things for my grandkids,'' she says.

Japan's penny-pinching savers and earnest salarymen may at last be ready to loosen their purse strings as bank deposits earn more and millions of workers collect retirement windfalls. Economists forecast consumer spending will accelerate this year as demand awakens in the world's second-largest economy after a decade of deflation and stagnant wages.

Japan needs the boost to keep its economy growing as demand from the U.S. wanes, says Hiroshi Shiraishi, an economist at Lehman Brothers Japan Inc. in Tokyo. ``If the U.S. slowdown is moderate, household spending will gradually firm up and it'll be enough to keep the economy growing at the current pace,'' he says.

The World Bank says consumer spending will help Japan's economy expand at a 2.3 percent rate this year, up from 2.2 percent in 2006. Growth is picking up even after Japanese manufacturers cut production in January and February because of reduced demand from the U.S. and elsewhere in Asia.

Vindication for Fukui

Sustained growth would vindicate Bank of Japan Governor Toshihiko Fukui's policy of raising the benchmark overnight rate, currently 0.5 percent, from near zero last year. It might also provide a welcome boost for Prime Minister Shinzo Abe's shaky government, which is facing its first parliamentary elections in July.

The Japanese consumer has so far proven an elusive target. Previous predictions of a spending spree, most recently last year, turned out to be premature: Consumer spending rose 0.9 percent in 2006, the slowest in three years, and was flat in the second half of the year.

Some are still skeptical. ``I'm not entirely convinced that strong consumer spending can be taken for granted'' because the savings habit is so deeply ingrained, says Julian Jessop, chief international economist at Capital Economics Ltd. in London. ``There are good reasons to be optimistic this year about consumer spending, but I remain cautious because of the risk of a rebound in savings rates.''

Rising Spending

Still, household spending rose in January and February after falling every month last year. Demand for services reached a record in January and department-store sales rose in February at the fastest pace in almost a year.

``The latest round of data has offered encouragement that the recovery is finally filtering down to households,'' says David Cohen, director of Asian economic forecasting at Action Economics in Singapore.

Mitsubishi UFJ Financial Group Inc., Japan's biggest bank, is now paying 0.2 percent on regular savings accounts, up from 0.001 percent before the Bank of Japan raised rates in July. Takuji Aida, chief economist at Barclays Capital in Tokyo, says higher rates may generate as much as 1.5 trillion yen ($12.6 billion) in household interest income.

Interest and dividend income this year will boost private consumption by 1 percentage point, according to Masaaki Kanno, chief economist at JPMorgan Securities Japan Co. and a former Bank of Japan official.

New Retirees

Payments to new retirees this year may contribute another 0.2 percentage point to spending growth, according to Takashi Omori, chief economist with UBS Securities Japan.

Over the next three years, 6.9 million people born in Japan's post-World War II baby boom reach the retirement age of 60. The Cabinet Office estimates that lump-sum payments to this year's retirees, in addition to their pensions, will total about 9 trillion yen. That works out to an average of 17.5 million yen, or about $147,000, per person, according to UBS Securities Japan Ltd. in Tokyo.

Aeon Co., Japan's largest retailer, has its sights on the wave of retirees. Aeon last month started a promotion to encourage them to use some of the windfall to spruce up their wardrobes. The ``re-fresh-man campaign'' offers discounts on blazers and sportswear to customers who trade in their old business suits. ``Response has been a lot better than we expected,'' says Aeon spokesman Takeshi Kodama.

The Japanese workers reaching retirement age over the next three years represent 5.4 percent of the population, and have assets totaling 130 trillion yen, almost 10 percent of all personal financial holdings, according to Dai-ichi Life Research Institute Inc.

Sashimi or Steak

New retirees ``are going to change how they spend their money,'' says Aeon's Kodama. ``They're going to do things like take trips and treat themselves to nice meals at home. We expect them to buy travel gear or sports equipment, and to splurge on a better cut of sashimi or steak.''

Economists say the retirements of the next few years may help set the stage for a lasting improvement in consumer spending by opening more full-time job opportunities for younger Japanese, giving them more money to spend.

In the decade after Japan's asset bubble burst, companies replaced full-time employees with part-time workers, whose pay averages less than half that of regular employees, according to Atsushi Seike, professor of labor economics at Tokyo's Keio University and a member of the government's labor policy council.

From 1997 to 2005, average pay fell about 10 percent, labor ministry reports show; one in three workers held a part-time or temporary position last year, compared with one in five a decade earlier.

Toyota's Plans

Still, the number of full-time employees grew last year for the first time since 2003, and indications are the trend is continuing. Toyota Motor Co., Japan's third-largest private employer, plans to increase its domestic new hires 11 percent to 3,500 people in fiscal 2008. Fast Retailing Co., Japan's largest clothing chain, will more than double its full-time workforce in the next year.

``Employers realize the cuts to their regular workforces were excessive,'' Seike says. ``We're seeing an adjustment.''

As the employment picture improves, Japan's consumers may change their savings habits too. The savings rate may come down to about 13 percent of disposable income this year from almost 16 percent at the end of 2006, says Jesper Koll, chief Japan economist at Merrill Lynch & Co. in Tokyo. ``Consumer demand is the key economic dynamic in Japan from here forward,'' he says.

For Kobayashi, the Nagoya grandmother, the calculation is simpler. ``I'm an old lady and my only income is a pension,'' she says, and anything that gives her more money to spend ``is a good thing.''

To contact the reporter on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net

Yen May Fall to Low Against Euro as G-7 Doesn't Comment on Drop

Yen May Fall to Low Against Euro as G-7 Doesn't Comment on Drop

By Bo Nielsen and Min Zeng

April 14 (Bloomberg) -- The yen may weaken to a record low against the euro after officials from the Group of Seven industrial nations stopped short of saying that the Japanese currency's weakness is a threat to the global economy.

The official statement concluding the G-7 meeting in Washington yesterday said the group will keep monitoring exchange rates ``closely.'' The statement omitted a reference to the yen. The yen fell against 14 of the 16 most active currencies before the gathering ended.

``This basically gives a green light for people to continue selling the yen,'' said Michael Woolfolk, a senior currency strategist at the Bank of New York in New York. He said the yen may drop to 165 per euro by the end of the second quarter.

The yen fell 1.1 percent this week to 161.31 per euro from 159.53 on April 6 and touched 161.43, a record low. The Japanese currency traded almost unchanged at 119.26 per dollar from 119.25 last week. The dollar fell to $1.3527 per euro from $1.3379 per euro on April 6 and reached $1.3554 per euro, the weakest in more than two years.

The euro has strengthened six consecutive weeks versus the yen, the most since December. The common currency received a boost on April 12 when European Central Bank President Jean- Claude Trichet signaled policy makers will continue to increase borrowing costs this year.

Carry Trade

The communiqué resembled the one released after the Feb. 10 meeting in Essen, Germany, urging investors to recognize that Japan's economic recovery is ``on track.''

That message failed to persuade investors to curb borrowing in the yen to invest in higher-yielding assets overseas, a practice known as the carry trade weighing on the yen. Two weeks after the meeting the Japanese currency had weakened 1 percent to an all-time low versus the euro.

International Monetary Fund Chief Economist Simon Johnson said in Washington on April 11 that the carry trade in which investors borrow in low-yielding countries to invest in higher- yielding assets elsewhere isn't necessarily destabilizing for financial markets.

The Japanese economy is expected to grow 2.4 percent this year, up from 1.4 percent last year, according to the median forecast of 12 economists surveyed by Bloomberg. Consumer prices fell 0.3 percent in February, according to government reports, reducing the argument for the Bank of Japan to lift interest rates from 0.5 percent, the lowest among major economies.

Interest Rate Futures

``The carry trades will continue and the yen will continue to weaken,'' said Robert Houck, chief currency trader with Wells Fargo Bank in Minneapolis. Houck said the yen may fall to 167 against the euro over the next four to six weeks.

The ECB's benchmark borrowing costs are 3.75 percent and the Federal Reserve's 5.25 percent, unchanged since June.

Trichet led traders to speculate that rate increases are likely in the months ahead saying borrowing costs are ``accommodative'' to growth in remarks on April 13. The bank left borrowing costs unchanged at 3.75 percent that day.

Traders pushed the yield on the September interest-rate futures contract to 4.28 percent from 4.22 percent on April 5, suggesting they expect the ECB to raise borrowing costs two times by then. The contract settles to the three-month interbank offered rate for the euro, which has averaged about 16 basis points, or 0.16 percentage point, above the ECB's benchmark rate since 1999.

``I'm not sure what would hold the euro back,'' said Thierry Elias, head of currency trading in New York at Natexis Banques Populaires. Elias said the euro may strengthen to 164 versus the yen.

Accelerating Growth

Bets on an increase in the euro outnumbered wagers on a stronger dollar by a record 104,394 on April 10, figures from the Washington-based Commodity Futures Trading Commission showed. The euro gained 1.1 percent versus the dollar, the most in a month.

The euro region's economy will grow 2.3 percent this year, beating the 2.2 percent estimate for the U.S., the International Monetary Fund said in its semiannual World Economic Outlook released April 11 in Washington.

The spread between the 10-year German Bund yielding 4.22 percent and the comparable-maturity Treasury narrowed 12 basis points to 0.54 percent this week, the lowest more than two years.

The New Zealand dollar was the best performer against the euro and the U.S. dollar among the 16 most active currencies this week. The currency gained 2.34 percent versus the dollar to 73.73 touching 73.83 cents versus the New Zealand dollar, the lowest since May, 2005. The dollar reached 83.36 cents against the Australian dollar, the lowest since Oct. 1990.

Chinese Yuan

U.S. Treasury Secretary Henry M. Paulson said following the G-7 meeting that it was ``crucial'' for the Chinese yuan to have more flexibility ``now.''

The G-7 statement said it was ``desirable'' for the yuan to ``move.'' The yuan's weakness has been blamed for the growth in the ballooning U.S. trade balance and fueled protectionist pressures within the Congress. The U.S. imposed duties on imports of Chinese coated paper last month. Last year the current account deficit, the broadest measure of trade, was a record $856.7 billion or 6.5 percent of gross domestic product.

The yuan's movements are restricted by the Chinese authorities.

To contact the reporter on this story: Bo Nielsen in New York at bnielsen4@bloomberg.net ; Min Zeng in New York at mzeng2@bloomberg.net

Last Updated: April 13, 2007 22:37 EDT

Dollar Falls on Speculation Report to Show Wider Trade Deficit

Dollar Falls on Speculation Report to Show Wider Trade Deficit

By Stanley White and Ron Harui

April 13 (Bloomberg) -- The dollar slid to a two-year low versus the euro and fell against the yen on speculation government data today will show a widening U.S. trade deficit.

``The report may spark concern whether the U.S. will be able to attract foreign investment to finance the shortfall,'' said Yuji Saito, a senior currency dealer at Societe Generale SA in Tokyo. ``It's a factor for selling the dollar.''

The New York Board of Trade's Dollar Index, which measures its value against currencies of six trading partners, reached a two-year low after International Monetary Fund Managing Director Rodrigo de Rato yesterday said the currency has room to drop. It fell for a second day against the yen on speculation Group of Seven leaders will discuss the Japanese currency's weakness at a meeting in Washington.

The dollar dropped to $1.3508 per euro at 2 p.m. in Tokyo from $1.3482 late yesterday. It fell as low as $1.3524, the weakest since Jan. 3, 2005. Against the yen, it was at 118.85 from 119.16. The U.S. currency may fall to $1.3550 per euro and to 118.50 yen today, Saito said.

The dollar index traded as low as 82.161, the weakest since March 2005, taking losses this year to 1.7 percent.

``A decline in the dollar index reflects a sense of mounting crisis over the U.S. trade imbalance issue,'' said Masaki Fukui, a senior economist and currency analyst at Mizuho Corporate Bank Ltd. in Tokyo. ``With U.S. trade deficits with Asian countries widening, the index is likely to slide steadily.''

The dollar may fall to 118 yen by year-end, Fukui said.

The trade deficit rose to $60 billion in February from $59.1 billion the previous month, according to a Bloomberg News survey. The Commerce Department releases the report at 8:30 a.m. in Washington. China this week said its trade surplus almost doubled in the first quarter from a year earlier. The dollar has declined 1.2 percent versus the euro since March 30.

Yield Spreads

The euro got an added boost versus the dollar on speculation European interest rates will rise faster than those in the U.S.

European Central Bank President Jean-Claude Trichet yesterday said monetary policy remains ``accommodative'' after the central bank kept rates at 3.75 percent.

Federal Reserve officials concluded last month that while additional rate increases may be necessary, uncertainty about the economy means that isn't the only option, according to minutes released April 11. The Fed's benchmark rate is 5.25 percent.

The spread on 10-year Treasury yields over German government debt of the same maturity narrowed to 0.5525 percentage point today, the lowest in seven weeks.

``U.S. interest rates may be higher than those in Europe, but we can expect spreads will continue to narrow,'' said Kengo Suzuki, currency strategist at Shinko Securities Co. in Tokyo. ``This will benefit the euro.''

The common European currency may rise to $1.3670 in the next few months, he said.

Investment Flows

The euro may rise to a record 165 yen in the next three months on speculation a strengthening economy and further increases will attract more investment in European assets, said Osamu Takashima at Bank of Tokyo-Mitsubishi UFJ Ltd. He raised his forecast from a January call for 163.

Government bond yields rose to the highest in almost five years. The Euro Stoxx 50, a measure for the 13 nations sharing the euro, has gained 3.9 percent this year.

``The inflow of foreign funds into European bonds is quite steady, while investors are beginning to pump more money into stocks,'' Takashima, chief analyst of the global markets sales and trading division at Japan's largest bank, said in an interview today. ``This will keep the euro strong.''

G-7 Meeting

The yen gained against the dollar and halted a three-day decline against the euro after Trichet said the currency doesn't reflect the strength of the Japanese economy. It is the worst performing of the 16 most-actively traded currencies over the past month as investors bought higher-yielding assets with funds borrowed in Japan, a strategy known as the carry trade.

``The yen will be supported through today,'' said Joanne Masters, a currency strategist at Macquarie Bank Ltd. in Sydney. ``The yen strengthened on the back of Trichet's comments, which were clearly made ahead of the G-7. It's no surprise Europeans are starting to feel conscious about the strength of the euro.''

The yen traded at 160.71 against the euro from 160.65 late in New York yesterday, and reached a record low 160.87. The currency headed for a sixth weekly decline.

To contact the reporter on this story: Stanley White in Tokyo at swhite28@bloomberg.net ; Ron Harui in Singapore at rharui@bloomberg.net .

Last Updated: April 13, 2007 01:03 EDT

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Consumer Rebound `Crucial' to Japan Growth, IMF Says (Update1)

Consumer Rebound `Crucial' to Japan Growth, IMF Says (Update1)

By Lily Nonomiya

April 11 (Bloomberg) -- A sustained rebound in consumer spending is crucial for Japan's economy to be able to weather a global slowdown, the International Monetary Fund said.

``A recovery in consumption is expected to largely offset some cooling of exports in view of the anticipated moderation of global growth,'' the fund said in its semiannual economic outlook released today. ``Near-term prospects depend crucially on whether a rebound in consumer spending'' is sustained.

Outlays by consumers, whose spending accounts for more than half of the economy, rebounded at the end of last year after falling at its fastest pace in a decade in the third quarter. Brighter job prospects have pushed unemployment to a nine-year low, which may help encourage consumers to spend, the fund said.

``We are quite optimistic that growth will be sustained in Japan,'' Simon Johnson, chief economist at the Washington-based IMF, said at a news conference on the World Economic Outlook report today. ``We think that their priorities are exactly right,'' focusing on reducing budget deficits while nurturing the economic expansion, he said.

The world's second biggest economy will probably grow 2.3 percent this year and 1.9 percent in 2008, the report said, little changed from the fund's September forecasts of 2.1 percent and 2 percent growth.

``Tightening of the labor market is likely to be increasingly reflecting in rising real wages, providing further support for household spending,'' the report said.

BOJ's Policy

The Bank of Japan has ``appropriately taken a cautious approach to raising interest rates'' since ending its zero-rate policy last year. ``Monetary accommodation should be removed only at a gradual pace,'' the report said.

Japan's central bank lifted its benchmark interest rate for a second time in seven months in February, to 0.5 percent, as the economy shrugged off seven years of deflation.

``Greater clarity'' over what the bank sees as a desirable rate for inflation would allow a smooth unwinding of carry trades, the IMF said. The yen has slumped since December 2006 as ``carry trade'' investors borrowed yen to purchase higher- yielding assets overseas.

The gap between borrowing costs in Japan, the lowest in the industrialized world, and other major economies has caused an increase in the trades, the fund said.

Japan's currency has slumped 10 percent against the euro in the past year, reaching a record low of 160.42 today. In January, the yen touched its weakest against the dollar since 2002.

The carry trade ``isn't as destabilizing'' as some analysts have said, Johnson said. There is ``no need for heavy handed intervention at this time'' to counter the carry trade, he said.

Japan hasn't intervened in the foreign-exchange market to buy or sell its currency since 2004.

To contact the reporter on this story: Lily Nonomiya in Tokyo at lnonomiya@bloomberg.net

Last Updated: April 11, 2007 10:03 EDT

Japan's Machine Orders Fall More-Than-Expected 5.2% (Update3)

Japan's Machine Orders Fall More-Than-Expected 5.2% (Update3)

By Lily Nonomiya

April 11 (Bloomberg) -- Japan's machinery orders fell a more-than-expected 5.2 percent in February, highlighting concern among manufacturers that export growth may slow this year.

Non-government orders, excluding shipping and utilities, declined to 1.04 trillion yen ($8.7 billion) from a month earlier, the Cabinet Office said in Tokyo today. The median estimate of 31 economists surveyed by Bloomberg News was for a 0.4 percent drop.

Fujitsu Ltd. and NEC Electronics Corp. plan to cut spending by almost a third this fiscal year to prepare for a slump in orders for chips used in cameras and game consoles. Orders made by non-manfacturers rose, signaling service companies including Tokyo Electric Power Co. and Central Japan Railway Co. may drive business investment in the world's second-largest economy.

``Capital investment will remain sluggish in the first half of this fiscal year because spending by manufacturers is losing steam,'' said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo. ``However, spending by non- manufacturers will probably offset such a slowdown and keep supporting the country's business investment overall.''

The yen traded at 118.93 per dollar at 11:01 a.m. in Tokyo compared with 119.11 before the report was published. The yield on Japan's 10-year bond fell 2.5 basis points to 1.655 percent.

Orders for electronic machinery such as semiconductor testing equipment led the declines, falling 29.7 percent, the biggest drop in almost nine years.

Fujitsu, NEC Electronics

Fujitsu, Japan's fifth-largest chipmaker, said April 4 it will reduce spending on semiconductors about 30 percent this fiscal year because of slowing demand for chips used in consumer electronics. NEC Electronics will trim spending at the same rate.

Machine orders by non-manufacturers increased 5.3 percent, led by utilities companies, the government said.

Tokyo Electric Power, Asia's biggest utility, will boost investment over three years starting this month to build power plants and expand electricity transmission lines. It plans to increase spending 23 percent this year. Central Japan Railway, also known as JR West, said last month it will increase spending the most in eight years to replenish old cars and boost safety.

``Growth, and with it employment and business investment, are clearly rotating away from the manufacturing sector toward the non-manufacturing sector,'' said Glenn Maguire, chief Asia economist at Societe Generale SA in Hong Kong. ``The recent Tankan survey highlights this.''

Tankan Survey

The Bank of Japan's Tankan business survey last week showed the nation's largest service providers, or those with more than 1 billion yen in capital, plan to boost spending 3.1 percent this year. An increase would mark the third straight year of gains, the longest since 1991. Manufacturers said they'll increase outlays 2.5 percent, faster than economists estimated.

``We saw strong spending estimates from the Tankan, but that could change depending on the outlook for exports,'' said Junichi Makino, a senior economist at Daiwa Research Institute in Tokyo. ``Last year's spending plans were driven by exporters so a stall in shipments is going to have a significant impact on capital spending in 2007.''

Japan's export growth slowed to 9.7 percent in February, about half the pace of January, and the prospect of a global slowdown caused manufacturers to reduce production for a second month in February, the first back-to-back drop in a year.

Bank of Japan Governor Toshihiko Fukui and his policy board colleagues kept borrowing costs on hold for a second month yesterday, maintaining the key overnight call rate at 0.5 percent. Fukui remained optimistic about the outlook for spending and overseas demand.

BOJ's Fukui

Spending plans in the Tankan ``were solid given that they were estimates made at the start of the fiscal year and followed double-digit spending increases in the previous year,'' Fukui told reporters after the rates decision. Capital spending projections tend to be conservative in the March survey and are upgraded throughout the year.

Other sections of today's report signaled global demand remains intact. Orders for Japanese machinery overseas rose 24 percent in February, more than double the pace in January, alleviating concern global growth is stalling, said Jesper Koll, chief economist at Merrill Lynch & Co. in Tokyo.

Machinery orders are a leading indicator of spending as measured by gross domestic product. Economists say orders are placed three to six months before they're used to build factories, product lines or equipment.

To contact the reporter on this story: Lily Nonomiya in Tokyo at lnonomiya@bloomberg.net

Last Updated: April 10, 2007 22:10 EDT

BOJ Holds Rate at 0.5% Amid Price Slump, U.S. Concern (Update5)

BOJ Holds Rate at 0.5% Amid Price Slump, U.S. Concern (Update5)

By Mayumi Otsuma

April 10 (Bloomberg) -- The Bank of Japan kept interest rates unchanged for a second month after consumer prices fell and recent data signaled U.S. economic growth may slow.

Governor Toshihiko Fukui and his policy board colleagues voted unanimously to hold the key overnight lending rate at 0.5 percent, the lowest among major economies, the bank said in a statement today in Tokyo. The decision was expected by all 49 economists surveyed by Bloomberg News.

Fukui later told reporters that the U.S. economy will achieve a soft landing and Japan's consumer prices will rise in the long run after hovering around zero percent in coming months. Confidence among Japan's largest manufacturers slipped from a two-year high on concern a U.S. slowdown may hurt exports, the central bank's quarterly Tankan business survey showed last week.

``There's still a pretty big chance for a rate hike later this year if the central bank can confirm Japan's growth is supported by demand at home, even if the U.S. economy deteriorates,'' said Ryutaro Kono, chief economist at BNP Paribas Securities Japan Ltd. ``We expect the bank to act in the fourth quarter.''

The yen traded at 159.74 per euro at 5:16 p.m. in Tokyo, after falling to a record 159.90. Japan's currency was at 119.15 against the dollar compared with 119.03 before the policy decision was announced.

Moderate Expansion

The central bank raised the key rate from near zero last July, its first increase in six years, and doubled it in February. Fukui said the bank is watching the effect of the February increase on the Japanese economy and reiterated that the timing of further rate adjustments can't be predetermined.

Of 16 Tokyo-based economists surveyed separately, seven said the bank will probably raise rates in August or September, and five said it will wait until the fourth quarter. Only one predicted an increase as early as July and three said the bank will pause until next year.

The bank said Japan's economy is ``expanding moderately,'' led by exports and business investment, leaving its monthly economic assessment unchanged today. The Tankan survey showed large manufacturers plan to boost spending by 2.5 percent in the year that began April 1, more than economists expected.

``Even with U.S. growth decelerating, we expect the Bank of Japan to raise rates in August or September, given the brisk capital investment plans shown in the Tankan,'' said Seiji Shiraishi, chief economist at HSBC Securities in Tokyo. He said demand from Asia is helping to ease the effect of a U.S. slowdown.

Slower U.S. Growth

Growth in the U.S. will slow to 2.1 percent this year from 3.4 percent in 2006, the World Bank predicted in its semi-annual report last week. East Asia, excluding Japan and the Indian subcontinent, will expand 7.3 percent this year, down from 8.1 percent, the Washington-based lender said.

``The U.S. slowdown is continuing, but we expect the economy's growth rate to return to potential after an adjustment so a soft landing remains likely,'' Fukui said. ``We need to watch both downside and inflation risks for the U.S. economy.''

Japan's core consumer prices, which exclude fresh food, declined 0.1 percent in February from a year earlier, the first drop since last April. The likelihood prices will keep falling will make it harder for the bank to raise rates in the first half of 2007, analysts say.

``There is very little evidence of the upward pressure on prices that we would normally expect to see at this advanced stage of the economic cycle,'' said Ben Eldred, a Japan strategist at Daiwa Securities Group Inc. in London. ``The chance of a rate rise over summer now appears close to zero.''

Worst Is Over

Some economists said there's a chance the bank will raise rates before a July Upper House election should it become confident that the U.S. economy will pick up later in the year.

``The worst of the downturn is over for the U.S. economy and we can anticipate foreign demand for Japanese exports to gather steam later this year,'' said Hiromichi Shirakawa, a former BOJ official and now chief economist at Credit Suisse in Tokyo. The Bank of Japan may raise rates as early as May or June, he said.

Demand may be picking up at home, too. Spending among Japanese households rose in the first two months of 2007 after declining every month last year. Economic and Fiscal Policy Minister Hiroko Ota told reporters today that consumption is showing ``brighter signs,'' though wages need to increase more.

To contact the reporter on this story: Mayumi Otsuma in Tokyo at motsuma@bloomberg.net

Last Updated: April 10, 2007 04:19 EDT

Euro May Rally to Record, Traders and Analysts Clash (Update2)

Euro May Rally to Record, Traders and Analysts Clash (Update2)

By Agnes Lovasz and Bo Nielsen

April 9 (Bloomberg) -- The euro's rise has taken analysts by surprise and traders expect more gains as the region's economy grows and interest rates climb.

Investors in futures have $15.9 billion more in bets on the euro strengthening than on a decline, data from the Washington- based Commodity Futures Trading Commission show. Options traders are paying more for the right to buy euros than to sell the currency.

Traders sending the euro toward record highs are clashing with economists, who predicted in December that the currency would trade at $1.328 by the end of the first quarter and fall 1 percent to $1.305 this year, according to a Bloomberg News survey. They stuck to their calls in March, saying the euro would weaken to $1.31 by 2008.

``The euro's the safest bet,'' said Peter Lucas, who's been buying euro forwards as chief investment officer at Ashburton Ltd., which manages $1.7 billion in Jersey, in the Channel Islands. ``We let the market do the talking.''

Europe's single currency traded at $1.3379 at 7:58 a.m. in New York and at 159.59 yen. It rose to a two-year high of $1.3442 and a record 159.69 yen last week.

The euro is up 1.9 percent against the dollar and 3.7 percent versus the yen since European Central Bank President Jean-Claude Trichet followed a March 8 interest-rate increase by saying borrowing costs were still low enough to fuel expansion. The 13-nation European currency rose 0.2 percent to the dollar last week, following a 2.0 percent gain the past month. It reached a record $1.3666 on Dec. 30, 2004.

Group of Seven

The currency's strength likely will be addressed at the Group of Seven industrialized nations meeting starting April 13 in Washington, D.C., said Jim O'Neill, head of global economic research in London at Goldman Sachs Group Inc.

European finance ministers said on March 27 that the economy of the nations sharing the currency can avoid being dragged down by a slowing U.S. expansion. They expressed concern that a rising euro may threaten to slow growth in the region before other G-7 meetings.

The euro has also risen 1.6 percent this year against the Swiss franc and 1.1 percent against the British pound as traders boosted bets that faster growth would prompt the ECB to raise rates. Interest-rate futures show traders increased bets the ECB will increase borrowing costs this year to at least 4 percent from 3.75 percent currently. The yield on the December contract gained to 4.25 percent from 4.20 percent a week earlier.

The contract settles to the three-month interbank offered rate for the euro, which has averaged about 16 basis points above the ECB's benchmark since 1999.

Faster Growth

``The risk is there'll be more than one hike,'' said Niels From, a currency strategist at Dresdner Kleinwort in Frankfurt, who predicted the euro will rally in the Bloomberg survey. ``Analysts will raise their forecasts for the euro. We're confident it will break previous record levels.''

Consumers are more optimistic and inflation is accelerating in Germany, Europe's largest economy, data last week showed. The ECB on March 8 raised its forecast for euro-region growth in 2007 to about 2.5 percent, from 2.2 percent previously.

Signs of faster growth prompted Commerzbank AG economist Carsten Fritsch to revise his forecast. ``The ECB is hawkish and that led us to change our call'' and predict the euro will strengthen to $1.36 by year-end, compared with $1.27, he said. ``Economic data and business sentiment has been better than expected.''

Shifting Forecasts

Commerzbank increased its forecast for European benchmark rates to 4.25 percent this year, from 4 percent. The Frankfurt- based bank also cut its prediction for U.S. borrowing costs to 4.5 percent, from the Federal Reserve's 5.25 percent target for overnight loans between banks.

Trichet last week said inflation has ``upside risks,'' adding to speculation the ECB will raise rates beyond 4 percent.

``The euro will probably go higher,'' said Adnan Akant, head of foreign exchange at Fischer Francis Trees & Watts in New York, which oversees $39 billion in assets. ``It's a slow motion sort of thing and driven by the gradual narrowing of interest- rate differentials.''

Interest-rate futures in the U.S. show a 58 percent chance the Fed will reduce rates to 4.75 percent by the end of the year.

The euro's rally will peak as seven rate increases since December 2005 and a stronger exchange rate slow the economy at the same time that U.S. growth picks up, some analysts said. Yields on 10-year Treasuries are about 0.64 percentage point higher than those on similar-maturity German notes, down from 1.1913 percentage points in May 2006.

Euro Peaking?

Europe's economy ``will start to lose momentum, while in the U.S. a lot of the bad news will be out of the way,'' Mitul Kotecha, head of currency strategy at Calyon, said in London. ``That will benefit the dollar.'' Calyon expects the euro will reach $1.30 by year-end.

The European currency fell as much as 0.5 percent versus the dollar on April 6 after a government report showed the U.S. added more jobs than expected in March, reducing speculation the Fed will lower borrowing costs in the third quarter.

The euro's ascent from 87 cents five years ago hurts European exporters. Pernod Ricard SA, the world's second-largest liquor maker, said last month the currency knocked almost 5 percent off operating profit in the second half of 2006.

Futures Bets

The amount of futures contracts betting on a stronger euro is close to the record 102,598 reached in February, according to the Commodity Futures Trading Commission. The wagers increased to 95,078 as of April 3, from 77,456 in the first week of the year. The contracts are used by hedge funds and speculators.

Demand for one-month call options granting the right to buy euros increased in the past month. The so-called risk-reversal rate has risen to 0.425 percent, from 0.05 percent on March 5. A positive figure indicates traders are favoring calls over puts, which give the right to sell the euro.

``The euro will go higher because of the strong economy and potential for higher rates,'' said Toshi Honda at Mizuho Corporate Bank Ltd. in London, among the most bullish analysts surveyed. ``It has a chance of reaching $1.40 by the year-end.''

To contact the reporters on this story: Agnes Lovasz in London at alovasz@bloomberg.net ; Bo Nielsen in New York at bnielsen4@bloomberg.net

Japanese Stocks Advance, Nikkei Reaches 6-Week High on Yen Drop

Japanese Stocks Advance, Nikkei Reaches 6-Week High on Yen Drop

By Patrick Rial

April 9 (Bloomberg) -- Japanese stocks advanced, with the Nikkei 225 Stock Average closing at its highest in six weeks.

Toyota Motor Corp. paced gains after the yen weakened against the dollar and the U.S. unemployment rate unexpectedly dropped, boosting confidence exporters will be able to increase sales in the world's largest economy.

``The employment data was good news for exporters because it provided evidence that the fundamentals of the U.S. economy are stable,'' said Hideyuki Ookoshi, who oversees $365 million at Chiba-Gin Asset Management Co. in Tokyo. ``If the yen continues to trade around its current level that will be positive for companies here.''

The Nikkei 225 rose 258.98, or 1.5 percent, to 17,743.76 in Tokyo, the highest close since Feb. 27. The broader Topix index advanced 21.02, or 1.2 percent, to 1738.10. Electronics companies and automakers accounted for 37 percent of the Topix's gain. A measure of steelmakers was the only one of the 33 industry groups included in the benchmark to fall.

Toyota, the world's largest automaker by value, advanced 140 yen, or 1.9 percent, to 7,540. Sony Corp., the maker of the PlayStation 3 game console, climbed 240 yen, or 3.9 percent, to 6,440, its biggest gain since March 6. Komatsu Ltd., the world's second-largest maker of construction machinery, jumped 105 yen, or 4.3 percent, to 2,570.

The yen weakened to 119.26 against the dollar on April 6, the lowest since Feb. 26. Japan's currency fell to a record intra-day low of 159.69 versus the euro. A weaker yen increases the value of Japanese exporters' foreign dollar and euro- denominated sales when converted back into yen, while their products become more competitive abroad.

The yen recently changed hands at 119.33 per dollar and 159.39 to the euro.

More U.S. Jobs

U.S. unemployment fell to 4.4 percent last month, the Labor Department said on April 6. That matched a five-year low in October. The median estimate of 73 economists surveyed by Bloomberg was for the rate to climb to 4.6 percent from 4.5 percent. Additionally, 180,000 new jobs were created in March, more than the forecast increase of 130,000.

``This should be a favorable week for stocks after the firm employment data from the U.S. and the yen fell to the 119 range against the dollar,'' said Chisato Haganuma, a strategist at Nomura Securities Co. in Tokyo.

Adding to gains, Masatoshi Kikuchi, chief equity strategist at Merrill Lynch & Co. in Tokyo, wrote in a note to clients dated April 6 that technology shares may outperform the Topix this year on expectations of consolidation in the industry.

Rates Rising

Ship owners advanced on speculation profit will increase after freight prices climbed. Kawasaki Kisen Kaisha Ltd., Japan's No. 3 shipping line, soared 69 yen, or 6.1 percent, to 1,196. Mitsui O.S.K. Lines Ltd., the second biggest, surged 61 yen, or 4.7 percent, to 1,353. A measure including shipping lines climbed 4.5 percent, the largest percentage gain among Topix industry groups.

The Baltic Dry Index, a measure of rates for transporting dry-bulk goods across a range of ship sizes and routes, rose 0.8 percent to 5532 on April 5, the highest since Dec. 14, 2004. The measure has dropped on only three of the last 34 trading days.

Companies that make environmentally friendly goods rose on speculation demand from China, the world's fastest growing major economy, will boost sales.

Ebara Corp., a maker of waste treatment facilities and other environmental technologies, jumped 43 yen, or 6.7 percent, to 685. That was the largest percentage move among 1,889 stocks globally in the Morgan Stanley Capital International World Index. Mitsubishi Kakoki Kaisha Ltd., which also builds sewage plants, surged 44 yen, or 11 percent, to 439.

Environmental Assistance?

Chinese Premier Wen Jiabao will arrive in Japan on April 11. China will express its intention to participate actively in negotiations to reduce greenhouse gas emissions from 2013 in a joint statement after the Japan-China summit this week, the Yomiuri newspaper said on April 7.

``The Chinese premier will visit Japan this week and there are expectations he will ask for help on solving the country's environmental problems,'' said Masayoshi Okamoto, a strategist at Jujiya Securities Co. in Tokyo. ``Ebara has become the big hit among environment-related stocks.''

Pentax Corp. advanced 67 yen, or 9.1 percent, to 800. Hoya Corp., Japan's largest optical glassmaker, said on April 6 it offered to pay about 770 yen for each share of Pentax, an increase from an earlier offer valued at about 648 yen a share. Meanwhile, some board members at the camera maker opposed a merger agreement with Hoya, Pentax said yesterday. Hoya added 40 yen, or 1 percent, to 4,140.

KDDI Corp. rose 34,000 yen, or 3.5 percent, to 1.01 million, a seven-year high. Japan's second-biggest mobile phone operator added a monthly record 530,000 customers in March, more than the combined additions of its competitors.

NTT DoCoMo Inc., the nation's largest mobile phone operator, fell 1,000 yen, or 0.5 percent, to 215,000. Softbank Corp., the No. 3, dropped 80 yen, or 2.8 percent, to 2,815. DoCoMo added 298,000 subscribers, while Softbank expanded by 127,600 users.

``Right now, KDDI is the clear winner in the number portability fight,'' said Jujiya's Okamoto.

Ebara Corp. (6361 JT)
Hoya Corp. (7741 JT)
Isuzu Motors Ltd. (7202 JT)
Kawasaki Kisen Kaisha Ltd. (9107 JT)
KDDI Corp. (9433 JT)
Komatsu Ltd. (6301 JT)
Mitsubishi Kakoki Kaisha Ltd. (6331 JT)
Mitsui O.S.K. Lines Ltd. (9104 JT)
NTT DoCoMo Inc. (9437 JT)
Pentax Corp. (7750 JT)
Softbank Corp. (9984 JT)
Sony Corp. (6758 JT)
Toyota Motor Corp. (7203 JT)

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net .

Last Updated: April 9, 2007 02:33 EDT

Japanese Energy Stocks May Fall on Decline in Crude Oil Prices

Japanese Energy Stocks May Fall on Decline in Crude Oil Prices

By Makiko Suzuki

April 5 (Bloomberg) -- Japanese energy-related stocks such as Inpex Holdings Inc. may drop on speculation oil prices will fall further as tensions eased in the Middle East with the announcement 15 Britons seized by Iran will be released.

Stocks may also decline should investors judge their recent advance excessive. The Nikkei 225 Stock Average jumped 3 percent in the last two days, the biggest gain since the two days ended Aug. 9, 2006.

``Concern over geopolitical risk eased and that pushed crude prices lower,'' said Juichi Wako, a strategist at Nomura Securities Co. in Tokyo. ``Indexes may have a weak day after the Nikkei jumped 300 yen yesterday.''

Limiting losses, computer-related stocks including Toshiba Corp. may gain after Citigroup Investment Research said Microsoft Corp.'s earnings increased last quarter, helped by rising demand for the company's Windows Vista operating system.

Nikkei 225 futures expiring in June last traded at 17,575 in Chicago, little changed from the close of 17,580 in Osaka and up from 17,540 in Singapore yesterday. The Bank of New York Japan ADR Index, which tracks the nation's American depositary receipts, rose 1 percent.

The Nikkei advanced 1.7 percent to 17,544.09 yesterday and the broader Topix index rose 1.5 percent to 1730.52.

Crude oil for May delivery fell 0.4 percent to settle at $64.38 a barrel in New York yesterday. It recently traded down 0.2 percent at $64.26, set to fall for a third day.

Iran's President Mahmoud Ahmadinejad said yesterday 15 British sailors and Marines in captivity in Iran will be released, ending 13 days of increased tension between the U.K. and the Islamic state.

Futures touched $68.09 a barrel on March 27, the highest since Sept. 6., after Iran seized the British servicemen in waters separating Iran and Iraq.

Vista Boosting Profit?

Inpex is Japan's biggest oil explorer and Japan Petroleum Exploration Co. in the nation's second largest.

The Nikkei and the Topix yesterday had the biggest advance since March 8 after the yen weakened and an unexpected increase in U.S. home sales pushed exporter shares higher.

Shares of Microsoft, the world's biggest software maker, climbed 2.3 percent, the most in two weeks, yesterday after Citigroup said momentum is starting to build following the ``successful launch'' of the company's Vista operating system.

Brent Thill, a San Francisco-based analyst at Citigroup, boosted his third-quarter earnings estimate by 2 cents to 47 cents a share compared with the average analyst estimate of 45 cents in a Bloomberg survey. The company announces results on April 26.

Advantest's Operating Profit

Toshiba, Japan's second-largest chipmaker, also makes personal computers. Tokyo Electron Ltd. is the world's second- biggest supplier of chipmaking equipment and Matsushita Electric Industrial Co. is the biggest consumer electronics maker in the world.

Matsushita may also rise after the Nikkei English News said the company will open a research center in Vietnam this month to develop software that controls mobile phones and flat-screen televisions.

Advantest Corp., the world's biggest maker of memory-chip testing equipment, may decline after the Nikkei newspaper reported it may post a 7 percent decrease in operating profit, or sales minus the cost of goods sold and administrative expenses, to 60 billion yen ($505 million), missing the company's 61 billion yen forecast.

To contact the reporter for this story: Makiko Suzuki in Tokyo at msuzuki13@bloomberg.net .

Last Updated: April 4, 2007 19:36 EDT