Originally created 09/25/98

Tokyo stock prices surge on hopes of U.S. rate cut



TOKYO -- Japanese stock prices surged today, boosted by expectations of a U.S. interest rate cut that could help global markets. The dollar rose against the yen.

The benchmark 225-issue Nikkei Stock Average gained 415.97 points, or 3.02 percent, closing the day at 14,205.78 points. On Tuesday, the index rose 192.51 points, or 1.42 percent.

In late afternoon, the dollar bought 136.80 yen, up 1.66 yen from late Tuesday in Tokyo and also above its late New York level Wednesday of 135.75 yen. The currency ranged between 135.28 yen and 137.25 yen in today's trading.

Financial markets in Tokyo were closed Wednesday for a national holiday.

Stock prices started higher today as investors were cheered by Federal Reserve Chairman Alan Greenspan's signal that U.S. interest rates may be lowered, traders said.

Though an interest rate cut usually hurts a nation's currency, traders said the dollar gained as a Fed credit easing now would support U.S. stock prices and stabilize Latin American markets, thus bolster the U.S. currency's value.

"Following Greenspan's comments, the dollar's decline against the yen was limited -- that's why we could buy dollars," said Tatsuya Ishii, senior sales manager and head of customer foreign exchange at Banque Nationale de Paris in Tokyo.

Testifying before the Senate Budget Committee on Wednesday, Greenspan said Fed policymakers are fully aware of the widening financial crisis that has spread from Asia to the rest of the world.

That was the clearest indication yet that he will fight the crisis with lower U.S. interest rates. The Fed's policymaking committee meets next Tuesday.

The Dow Jones industrial average jumped 257.21 points to 8,154.41 at Wednesday's close, its highest finish in a month.

The Tokyo market was also encouraged that President Clinton on Tuesday urged Japan's Prime Minister Kieizo Obuchi to use public funds to solve Japan's banking crisis, traders said. The two leaders met in New York while attending the U.N. General Assembly meeting.

Traders said, however, doubts remain on the ability of ruling and opposition parties to compromise on bills designed to reform the ailing banking system.

The two sides are still deadlocked over whether to use public money to help the troubled Long-Term Credit Bank of Japan to smooth its planned merger with Sumitomo Trust and Banking.

LTCB shares ended the day at 18 cents a share, up 2 cents from Tuesday's finish. On Friday, shares dived to an all-time low of 13 cents.

Among gainers in Tokyo included high technology issues, including Sony and Hitachi, and bank stocks, steels and pharmaceutical issues. Losers included some construction issues.

Advancing issues outnumbered declines 871 to 290, with 133 issues unchanged. An estimated 459 million shares changed hands on the exchange's first section, down from Tuesday's 511 million shares.

The broader Tokyo Stock Price Index of all shares listed on the first section was up 27.84 points, or 2.65 percent, to 1,078.01. The TOPIX rose 2.38 points, or 0.23 percent, on Tuesday.

Meanwhile, the yield on the benchmark No. 182 10-year Japanese government bond fell to 0.880 percent from Tuesday's finish of 0.900 percent, driving its price to 108.24 yen from 108.04 yen.