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Market Update

Nikkei Edges Down, JX and TonenGeneral in Merger Talks

Author: Hiruki Nakamura
Last Update: 7:52 AM ET December 02 2015

4:30 PM Tokyo The Bank of Japan is on track to meet its 2% inflation target and the monetary base in November surged 32.5%. Euglena jumped as ANA plans to use mix algae-based biofuel. JX Holdings and TonenGeneral are in merger talks.

The Nikkei average in Tokyo edged down in a choppy trading session despite a merger between two large petrochemical companies.

Although domestic economic news signalled improving economic fundamentals, investors remained defensive on the downside risk of a slowdown in China.

Inflation is improving steadily and the central bank is on track with its target of 2% inflation, but it is prepared to act quickly if a Chinese economic slowdown harms the trend, said Bank of Japan Deputy Gov. Kikuo Iwata.

The monetary base surged 32.5% to 343.72 trillion yen in November, compared to the previous year month and the base was unchanged from October, the Bank of Japan said in a separate report.

Current account balance jumped 47.1%, including a 46.2% rise in reserve.

JX Holdings and TonenGeneral are in talks for a merger, while a state-backed fund plans to acquire a majority stake in Sharp for an estimated value of 200 billion yen.

The Nikkei 225 Stock Average slipped 74.27 or 0.4% to 19,938.13 and the broader Topix index edged up 0.31 to 1,602.26.

The yen weakened to 123.07 against a dollar.

Stocks in Review

Astellas Pharma Inc rose 0.3% to 1,754.50 yen after the pharmaceutical company, together with Ironwood Pharmaceuticals, announced successful Phase III clinical trial of linaclotide.

Astellas will submit a new drug application to the Ministry of Health, Labor and Welfare in Japan in 2016.

Euglena Co Ltd surged 8.8% to 1,875 yen after ANA Holdings, the largest national airline, said it plans to use biofuel of the algae products maker.

According to Boeing Co, more than 1,600 commercial flights used biofuel since 2011.

JX Holdings, Inc edged down 2% to 503.30 on reports that the petrochemical company is in merger talks with TonenGeneral Sekiyu KK. The deal is expected to be finalized by 2017.

The new entity will have annual sales of 14 trillion yen and will control more than half of all gasoline sales in the country.

Both companies confirmed they are in merger talks but said they have not made a formal decision yet.

The Japanese government is encouraging consolidation, slimming, and cost-cutting in the refining sector.

Sharp Corporation jumped 3.2% to 130 yen after the Yomiuri newspaper said that state-backed fund Innovation Network Corporation of Japan plans to buy a majority stake in the company for an estimated value of 200 billion yen.

The company was also considering various options for its LCD panel business including a sale or restructuring.

Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc