5:00AM New York, 7:00 PM Tokyo – The Bank of Japan keeps key rate at 0.5%. Industrial production declines 3.1% in March.

Stocks in Japan declined in volatile trading as gains in the morning session were reversed by a government report that showed that industrial production fell in March and caution before the U.S. Fed rate decision on Wednesday.

Market sentiment

In Tokyo trading Nikkei 225 fell 0.32% or 44.38 to 13,849.99, while the broader Topix Index declined 0.2% or 3.10 at 1,358.65.

In the first section of the Tokyo Stock Exchange 9.2 billion shares worth 1.1 trillion yen were traded and in the second section 387 million shares worth 6.4 billion yen changed hands.

Of the Nikkei 225 index shares 98 gained, 121 declined and 6 were unchanged. Matsushita Electric Industrial Co. led advancers in the index shares with a rise of 14.52% after the consumer electronics maker forecasted profit rise of 10% in the current fiscal year.

Bank of Japan keeps key rate on hold

The Bank of Japan today unanimously elected to keep its key interest rate at 0.5% as volatility persists in the global international markets.

Industrial production falls 3.1% in March

Japan’s Ministry of Industry, Trade and Economy reported today that industrial production fell by 3.1% from February in March, but fell 0.4% from the previous year at 106.8.

Industries that contributed to the increase were transport equipment, general machinery and fabricated metals respectively, while commodities that contributed to the decline are large passenger cars, reaction vessels, electronic and electric toys correspondingly.

According to the Survey of Production Forecast in Manufacturing, production is expected to fall 0.3% in April and to rise 3.4% in May.

In addition, industries that mainly contributed to the decrease in April are electronic parts and devices, information and communication electronics equipment and transport equipment in that order.

Also industries that mainly contributed to the increase in May are transport equipment, electronic parts and devices and information and communication electronics equipment respectively.

The report further noted that shipments in March slumped 3.9% from the previous month, and increased 0.1% from the previous year at 107 on a seasonally adjusted basis.
Transport equipment, general machinery, information and communication electronics equipment in that order were a drag on shipments.

Inventory in March increased for the second straight month by 0.2% from the previous month and 2.2% from the previous year at 105.6 as industries such as petroleum and coal products, electronic parts and devices, and fabricated metals correspondingly weighed on inventories.

Inventory ratio in March increased 6.7% from the previous month, an increase for the first time in three months and rose 4.1% from the previous year at 104.9.

Gainers & Losers

Matsushita Electric Industrial Co. led gainers in the Nikkei 225 index shares with a rise of 14.52% followed by rises in OKI Electric Industries of 9.18%, in Mitsubishi Electric Corp. of 6.68%, and Obayashi Corp. of 6.12%.

Matsushita Electric Industrial Co. led advancers after it forecasted profit increase of 10% in the fiscal year ending March 2009 on robust sales of flat panel TVs and digital cameras.