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Market Update

Nikkei Falls on U.S. Rate Worries, Toyota Probe Costs Rise to $3 B

Author: Hiruki Nakamura
Last Update: 12:15 PM ET March 20 2014

4:30 PM Tokyo – Nikkei index in Tokyo dropped 1.6% on the prospect of rising interest rate in the U.S. Toyota agreed to settle U.S. Department of Justice probe for $1.25 billion and the total cost of sudden acceleration in vehicles inquiries increased to $3 billion.

Stocks in Tokyo trading declined after the U.S. Federal Reserve trimmed its monthly bond purchase program and also in a surprise move lifted interest rate outlook for 2015 and 2016.

Japan’s trade deficit in February increased to 800.3 billion yen from 773.3 billion yen a year ago month, Finance Ministry said today.

The monthly deficit was the twentieth in a row as the country imports natural gas and oil to power several electric utility plants after the devastation of nuclear power plants.

In a preliminary report, the ministry said imports climbed 9% to 6.6 trillion yen from a year before, the largest in February.

Exports also increased in the month 9.8% to 5.8 trillion yen and auto exports jumped 4% mainly on firm demand from China. Plastics exports soared 17.6%.

Separately, an industry group said electricity sales in February by ten largest power suppliers rose 0.4% to 76.45 billion kilowatt-hours from a year ago, second monthly increase in a row.

The Nikkei 225 Stock Average declined 238.29 or 1.6% to 14,224.23 and the Topix index slumped 18.36 to 1,145.97.

The yen eased to 102.45 against the U.S. dollar.

Stocks in Review

Toyota and the U.S. Department of Justice agreed on a settlement for $1.25 billion for the alleged mishandling of sudden acceleration problem and subsequent handling of the crisis in 2009.

The company continues to face several Congressional, state and local inquiries and private lawsuits. To date, Toyota has paid or agreed to pay $3 billion for the sudden acceleration problem in the U.S.

Toyota generates about 30% of its global sales in the U.S. and 75% of sales are outside Japan.

Toyota Motor Corp dropped 83 yen to 5,425 yen. Honda Motor Co slid 19 yen to 3,536 yen. Nissan Motor Co Ltd fell 0.9% to 864 yen.

Sony increased 26 yen to 1,757 yen after the electronics products maker said it will rationalize supplier base of 1,000 for smart phones and digital cameras to reduce the costs and accelerate production.

Softbank Corp slipped 128 yen to 8,212 yen.

Fast Retailing Co plummeted 785 yen to 35,405 yen after the operator of Uniqlo casual clothing stores abandoned talks to buy U.S. rival J. Crew Group Inc.

Bridgestone Corp slumped 1.3% to 3,503 yen after the Japan-based tire maker named sole supplier of the newly-formed motorcycle racing ""Shell Advance Asia Talent Cup,"" in its inaugural season in 2014.

McDonald''s Holdings Co (Japan) Ltd dropped 1.2% to 2,636 yen after the fast food chain operator said it will lower the price of its regular hamburger to 100 yen from 120 yen including tax.

McDonald’s Japan will hold the price of a small coffee, hot apple pie and four other products currently sold at 100 yen.

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