DealBook: Profit at Nomura Surges on Rally in Japanese Markets

European and Japanese Central Banks Pledge Support, Boosting Shares and the Dollar

ECB Executive Board member Joerg Asmussen said on Monday the policy would stay as long as necessary. On Tuesday, BOJ board member Ryuzo Miyao said it was vital to keep long- and short-term interest rates stable.

Yields on U.S. Treasuries surged to their highest levels in over a year as prices skidded. A strong consumer confidence report underscored the notion that the Federal Reserve could soon trim its bond-buying program.

"The vicious selling once again materialized after the much-stronger-than-expected consumer confidence report," said Cantor, Fitzgerald Treasury strategist Justin Lederer.

Yields have jumped since Fed Chairman Ben Bernanke said on Wednesday that the U.S. central bank may decide to decrease its bond purchases gradually in the next few policy meetings if data shows the economy is gaining steam.

"The path of least resistance is higher yields," said Sean Simko, portfolio manager at SEI Investments.

Benchmark 10-year notes fell more than a point to 96-7/32 while their yields, which move inversely to price, soared to 2.17 percent from 2.01 percent on Friday. Ten-year yields have surged from 1.61 percent at the beginning of May as optimism about the economy has grown.

Thirty-year bonds fell more than two points in price while their yields rose to 3.33 percent, the highest level since March, and up from 3.18 percent on Friday.

Both the 10-year notes and 30-year bonds are on track for their worst monthly loss since December 2009.

U.S. STOCKS, DOLLAR RECOVER

U.S. stocks recovered from recent weakness, propelling the Dow to finish at yet another record closing high.

The Dow Jones industrial average gained 106.29 points, or 0.69 percent, to end at a record 15,409.39. The Standard & Poor's 500 Index rose 10.46 points, or 0.63 percent, to 1,660.06. The Nasdaq Composite Index climbed 29.74 points, or 0.86 percent, to close at 3,488.89.

The dollar rebounded against the euro and yen after data on U.S. consumer confidence and home prices suggested the world's largest economy was on a steady road to recovery.

The Fed's stimulus program is viewed as negative for the greenback because it floods the market with dollars.

A measure of U.S. consumer confidence rose in May to its highest level in more than five years. That private-sector report followed data showing single-family home prices rose in March, with their best annual gain in nearly seven years.

Higher Treasury yields have also boosted the appeal of dollar-denominated investments.

DOLLAR RISES AGAINST YEN AND EURO

The U.S. dollar rallied against the euro and yen as the stronger-than-expected U.S. economic data underscored views the Fed could reduce its bond purchases in coming months.

Against the yen, which tumbled broadly, the dollar rose 1.2 percent to 102.09 yen, rebounding from a two-week low of 100.68 set on Friday. The dollar rose to a 4-1/2-year high of 103.73 yen last week.

The euro rose 0.6 percent to 131.24 yen, pulling away from Thursday's trough of 129.94 yen.

The safe-haven Swiss franc fell, down 1.1 percent against the dollar at 0.9740 franc and down 0.6 percent against the euro at 1.2533 francs.

Currencies such as the yen and the Swiss franc, which rose sharply last week after a recent sell-off in stock markets, typically gain in times of financial uncertainty.

The dollar index, which measures the greenback versus a basket of currencies, rose 0.6 percent to 84.172.

Gold fell 1 percent as the stock market rally diminished bullion's safe-haven appeal. Strong buying of physical bullion, however, briefly reversed gold's fall.

Spot gold was down 1 percent to $1,380.81 an ounce by 3:25 p.m. EDT (8:25 p.m. British time), after trading as low as $1,373.14.

U.S. Comex gold futures for June delivery settled down $7.70 at $1,378.90 an ounce.

Among other precious metals, silver was down 1.7 percent to $22.25 an ounce. Platinum rose 0.6 percent to $1,455.74 an ounce, while palladium gained 2.1 percent to $751.22 an ounce.

Brent crude oil rose on increased Middle East risk and as stocks rallied. Brent crude oil for July rose $1.61 to $104.23 per barrel while U.S. crude rose $0.95 to $95.10 per barrel.

The promise of monetary support from the European and Japanese central banks was reinforced as French, German and Italian governments urged action to tackle youth unemployment. [ID:nL5N0E911M] Youth unemployment in countries like Greece and Spain has risen to 60 percent. [ID:nL3N0DY1IW]

In Europe, the broad FTSE Eurofirst 300 index closed up 1.3 percent at 1,246.44, while MSCI's world equity index rose 0.5 percent, reversing four days of losses.

Japan's Nikkei stock index, which last week reached a 5-1/2-year high before dropping 7.3 percent on Thursday, steadied on Tuesday, ending 1.2 percent higher.

(Additional reporting by Karen Brettell, Gertrude Chavez-Dreyfuss, Ryan Vlastelica and Frank Tang; Editing by Nick Zieminski and Dan Grebler)

Japanese Car Sales Plummet in China

Toyota announced on Tuesday that its sales to dealerships in China dropped 49 percent in September from the same month a year ago, while Honda said that its sales had fallen 40 percent and Nissan said that sales were down 35 percent. Mazda said last week that its sales had fallen 35 percent last month.

Japanese automakers have sharply cut production schedules through the end of October, a sign that they see little immediate improvement on the horizon, although they have followed corporate traditions so far of refraining from layoffs. Automakers only release figures for their sales to dealerships in China, as the government has halted the release of retail sales figures by dealerships to consumers for the past year.

When a 51-year-old man in Xi’an made the innocent mistake on Sept. 15 of driving with his family in a Toyota Corolla past an anti-Japanese demonstration, he was so severely beaten that he remains partially paralyzed from brain injuries, while the car was destroyed. The law enforcement authorities in another province detained last week the main suspect in the beating, a spokesman for the Xi’an police said by telephone on Tuesday.

The attack on the man and his car was briefly the most searched topic on Sina Weibo, a Chinese microblogging site resembling Twitter, as many suggested that the demonstrators had gone too far.

In a separate video widely circulated on the Internet within China and aired on television overseas, a mob overturned a Honda CR-V police car in Shenzhen and took turns smashing it with clubs.

Protesters took to the streets over a territorial dispute involving claims by China and Taiwan to sovereignty over a cluster of uninhabited islands northeast of Taiwan, known as the Diaoyu in China and as the Senkaku in Japan. Anti-Japanese protests subsided during the weeklong national holiday in China last week.

But the issue continues to simmer, with the Chinese government announcing that it would continue to send marine surveillance vessels to waters around the island that have been patrolled for decades by Japan’s Coast Guard. Chinese fishing boats may also try to reach the islands after the holiday, as it has become politically more difficult for either the Chinese or Japanese governments to stop them.

Japanese automakers were struggling in China even before this autumn, said Yale Zhang, the managing director of Automotive Foresight, a consulting firm in Shanghai.

“Even without this political issue, the Japanese manufacturers made a lot of mistakes in areas like product planning,” he said.

With the exception of Nissan, Japanese automakers have been much slower to introduce new models than the three market leaders in China — General Motors, Volkswagen and Hyundai. From January through July of this year, before the anti-Japanese protests started, all of the best-selling 10 models in China were produced by those three companies, Mr. Zhang said. He added it was the first time in many years just three companies had produced all 10 top sellers.

The three leaders appear to have been gaining further market share at the expense of Japanese car makers this autumn, with Hyundai’s sales rising 9.5 percent last month from a year earlier and General Motors’ sales up 1.7 percent. Volkswagen’s sales have also risen, but the company’s practice of releasing separate figures by brand and providing year-to-date figures instead of monthly figures makes it hard to say how much.

The attack that partially paralyzed the middle-aged man in Xi’an coincided with reports of damage to other Japanese-brand cars in that city, although no other comparable incidents of attacks on individuals. Although better known outside China for its terra cotta warriors, Xi’an, in western China, is a hub of China’s weapons manufacturing industry and a center of nationalistic sentiment.

A bar on one of the city’s biggest avenues, several blocks from the city’s main crossroads, had a large, nationalistic sign on the front door a few years ago, when anti-Japanese sentiment was less prevalent elsewhere in China. The sign read, “No Japanese allowed.”

By contrast, Shenzhen is in Guangdong province, in southeastern China. The province has been the biggest market and biggest manufacturing center for Japanese cars in China in recent years, and has welcomed the factories of many Japanese companies, particularly in consumer goods industries like electronics.

Some political commentators have suggested that the protests in Shenzhen also reflected dissatisfaction with the Chinese government, which has allowed anti-Japanese demonstrations even while continuing to ban protests against its own policies.

Bits Blog: Japanese Look for Alternatives to Apple's Maps

Kimimasa Mayama/European Pressphoto Agency Tokyo’s maze of buildings.

In the wake of the problems Apple’s new iPhone apps are causing Japanese, smartphone users are flocking to another map app, from Navitime. The Tokyo start-up scoffs at Google Maps when it comes to mapping journeys through the streets of Tokyo that confuse even native Tokyoites.

Google had done a better job than Apple in mapping Japan, incorporating various data sources and putting its software engineers to work to tailor its map app to meet local needs and tastes. But with Google’s maps no longer easily accessible from the newest iPhones, the past few days have given Japanese map companies a chance to show their stuff.

Navitime, a pioneer in online map navigation here, claims to provide a “total navigation” service on every available transportation medium, and the service largely lives up to its name.

On the Navitime app, a search for train directions between two locations in Tokyo not only brings up timetables and routes on foot; the app also suggests which train cars to board to avoid crowds and get to the correct exits quickly.

A crowdsourced function, meanwhile, gives a real-time analysis of congestion on Tokyo’s notoriously crowded subway lines, from Level 1 (seats available) to Level 5 (packed in, can’t move) to the dreaded Level 6 (impossible to board the train at all).

And for those who give up on Tokyo’s trains, Navitime provides maps tailored for cyclists, who can select routes that have fewer uphill routes or go mainly along big roads, for cyclists who like to go fast. Or users can opt for routes that stick to narrower backstreets for a quieter ride.

“It’s the attention to on-the-ground detail that counts,” said Keisuke Onishi, Navitime’s chief executive, who founded the mapping service in 1997 after studying mapping algorithms in college in the 1980s.

Mr. Onishi now leads a 400-person company that sends out teams to physically check and update routes and estimated times.

“You just can’t work off existing data. You have to go out and get live information,” Mr. Onishi said, “or people are going to get lost.”