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Market Update

Stronger Economic Data in May in Japan Lifted Nikkei 3.5%

Author: Hiruki Nakamura
Last Update: 11:45 AM ET June 28 2013

5:00 PM Tokyo Ė Core consumer prices reported by the government stopped falling in Japan in May and labor market demand increased to a five-year high. However, price increase is significantly below the Bank of Japanís target of 2%. The Nikkei index soared 3.5%.

Stocks in Tokyo soared after the latest batch of economic data offered early signs of improving economic landscape.

The core inflation that includes energy but excludes fresh food was unchanged in May from a year ago. The inflation at the core level halted its slide but is far from the central bankís target of achieving 2% rise in the next two years.

Industrial output in May advanced 2% from April and retail sales gained 1.5% from the previous month, statistics bureau said.

In addition, manufacturers expect June output is expected to decrease 2.4% before increasing 3.3% in July.

Also, consumer prices excluding energy and food prices declined 0.4% in the year to May after falling 0.6% in April.

Several private economists questioned Bank of Japanís target of achieving 2% inflation in the next two years as the economy slowly wakes up after two decades of inflation.

In a separate report the government said, the jobs-to-application ratio increased to 0.9 in May from 0.89 in April. The index is supposed to show how many jobs were available and in the May month 9 jobs were available for every 10 applicants.

The unemployment rate was unchanged at 4.1%, however household spending declined 1.6% in May from a year ago.

The Nikkei 225 Stock Average climbed 463.77 or 3.5% to 13,677.32 and the Topix jumped 35.01 or 3.2% to 1,133.84.

For the week, the Nikkei 225 advanced 3.4% and for the month of June declined 4.4%.

The yen weakened in Tokyo trading at 98.77 against one dollar.

Today Japan''s Ministry of Internal Affairs and Communications said seasonally adjusted unemployment rate stood at 4.1% in May unchanged from April.

Real estate companies led the gainers in todayís trading and Mitsui Fudosan soared more than 8%.

Insurers, financial services company and trust banks trimmed their exposure to the record low of 28% to Japanese stocks at the end of March, Japan Exchange Group Inc said today.

The stock exposure was at a record high of 44.1% in 1988.

Stocks in Review

Toyota Motor Corp gained 90 yen to 5,990 yen. Honda Motor Co. jumped 80 yen to 3,685 yen and reported May sales declined 27% and said sales in the domestic market dropped for the fifth consecutive month.

Nissan Motor Co Ltd climbed 34 yen to 1,005 yen and output plunged 30% and the company started production of electric vehicles in the United States and Britain.

Sony advanced 43 yen to 2,078 yen. Canon Inc rose 15 yen to 3,235 yen and Nikon up 14 yen to 2,314 yen.

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