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Equities plunge in Tokyo

TOKYO: Stocks ended down but off earlier lows due to buying on the dips and artbitrage-linked buying, brokers said. Weak financial strength ratings on Japanese banks by Moody's Investor Service had been discounted and had only limited impact on the bank shares or overall prices, they said.

"Falls in stock indices are nothing to do with the ratings, but with index-linked selling by corporations and less active foreign buying," said Isao Maruta, Managing Director of Universal Securities.

The Nikkei average ended 161.44 points or 0.90 percent lower at 17,871.05 after recovering from lows of 17,722.55.

September Nikkei 225 futures closed 120 points lower at 17,950 with 20,130 contracts traded. The TOPIX index ended down 12.73 points or 0.89 percent at 1,420.59, while the Nikkei 300 was down 2.81 points or 1.05 percent at 264.58.

"The Monday's rating were not definitive factors. Weak ratings had been discounted in the share prices before the announcement," said Kenzo Doi, analyst at Kokusai Securities.

"Some domestic investors used the ratings to sell bank shares, but buying of selective issues continued today as well and sentiment is still positive," said Shunji Suesada, General Manager at Yamaichi Securities.

Sumitomo Bank Ltd (8318.T) closed down 10 yen at 1,850, Sanwa Bank Ltd (8320.T) was up 10 yen at 2,030 yen and Fuji Bank Ltd (8317.T) ended down 30 yen at 2,120.

Among banks which were rated "E", the lowest rating awarded, Hokkaido Takushoku Bank Ltd (8312.T) was down 16 yen at 322, Nippon Credit Bank (8304.T) lost two yen to end at 421 and Chuo Trust and Banking (8408.T) ended down 50 yen at 1,280.

Many of the shares were showing weakness today prior to the Moody's announcement.

Overall the banking sector fell by 1.43 percent and was the fourth largest declining sector on the Tokyo Stock Exchange.

Brokers said optimistic about stocks despite Monday's drops. Monday's declines were basicallay a correction of the recent steep gains. I believe any dip will be a good opportunity to buy shares as long as the Nikkei stays above its 200-day moving average," Kokusai's Doi said.

The Nikkei's 200-day moving average stands at 17,268.25.

The dollar eased a little against the yen and that capped the top, but a soft dollar does not annoy investors much, brokers said. "The dollar is unlikely to fall again to 80 yen and few people are worried much about the dollar declines," an Ichiyoshi Securities broker said.

Pioneer Electronic Corp's (6773.T) shares were lower in reaction to the company's weak business performance in the first three months to June 30, 1995. They were down 90 yen at 1,990 on turnover of 355,000 shares.

Last Friday, Pioneer announced it posted a group pretax loss of 3.06 billion yen for the first quarter of 1995/96, against a profit of 2.25 billion yen in the same period a year earlier.

It posted a net loss of 1.82 billion yen against a profit of 257 million in the same period a year earlier.

Promise Co Ltd's (8574.T) shares dropped in the afternoon after the consumer financing company announced that it will hold a news conference at 4.30 p.m. (0730 GMT) today on the company's management policy Promise closed down 110 yen at 4,280 yen with 164,200 shares traded.

After market closed Promise said it will lower the maximum interest rates on uncollateralised loans to consumers.

Turnover in the first section was 488 million shares, compared to Friday's 586 million.

Declining issues outnumbered gainers today, with 638 lower, 371 higher and 170 unchanged.

Major declines were the brokerage, warehousing, mining, banking and shipbuilding sectors.

Advancers were led by the telecommunications, pulp/paper, real estate, oil and fishery sectors.

The second section closed down 14.69 points at 1,792.56 with 12.41 million shares changing hands.

The over-the-counter market index closed 3.25 points lower at 1,439.01.-Reuter