Japanese stocks rebound; central bank injects 326 billion USD in three days

Wednesday, March 16th 2011 - 03:05 UTC

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The death toll is expected to exceed 10.000 and 3% of Japan’s GDP

Japanese stocks rebounded Wednesday as concerns over the long-term impact of Friday's earthquake and tsunami on Japan's economy ease.

Japan’s Nikkei 225 index gained 6% in early trading on Wednesday. On Monday and Tuesday, the index dropped more than 16%, its biggest two-day fall in 23 years. Investors are optimistic about a recovery in the Japanese economy despite reports of another fire at the Fukushima Daiichi nuclear plant.

In support of markets Japan's central bank injected billions of dollars into financial markets for a third day to ease the impact of last week's quake. The Bank of Japan injected 3.5 trillion yen (43 billion USD) into markets on Wednesday following on Monday and Tuesday injections totalling 23 trillion yen (283 billion USD).

Friday's magnitude-9.0 earthquake and tsunami caused crippling problems at nuclear power plants which persist but these are some of the primary losses and damages: The death toll is expected to exceed 10,000, with north-eastern prefectures of Miyagi, Iwate and Fukushima most severely hit. At least 3,570 people were confirmed dead, but 7,558 people are still missing, according to Japan's NHK public broadcaster.

More than 440,000 people have been evacuated, NHK says. Hundreds of people are waiting for help in isolated areas and have no access to food.

About 850,000 households in the north are still without electricity in near-freezing weather, Tohuku Electric Power Co. says. The government says at least 1.5 million households lack running water.

More than 76,000 buildings have been damaged, including at least 6,300 completely destroyed, NHK says.

Citigroup expects 5-10 trillion yen in damage to housing and infrastructure, while Barclays Capital estimates economic losses of 15 trillion yen (183.7 billion USD) or 3% of Japan's GDP.

UBS expects Japan's economy to grow 1.4% this year, compared with its previous forecast of 1.5% expansion. But it upgraded its growth forecast for 2012 to 2.5%, up from the previous estimate of 2.1%.

The Tokyo Stock Exchange's first section, made up of the country's biggest companies, lost about $626 billion in market capitalization between Monday and Tuesday.

The northeastern region accounts for an estimated 6 to 8% of GDP, compared with around 12.4% from the areas affected by the Kobe quake in 1995. However, the loss of fixed assets and human capital from Friday's quake, which also triggered several explosions at a nuclear power plant north of Tokyo, looks to be far greater. It comes at a time when oil is hovering near a 2-1/2-year peak and other commodity prices remain elevated.