Japan stock market week to March 12, 2007

Tokyo rallied in the week to March 12. The Nikkei 225 rose 3.9% and recovered the 17,000 mark, while the Topix index ended up 4.7%. The bounceback was supported by diminishing uncertainties on the direction of global equity and the foreign exchange markets. The yen's fall against the US dollar caused investors to buy on recent weakness of export-oriented, high-technology stocks. Investors were also encouraged by the government's report that Japan's seasonally-adjusted machinery orders in January went up 3.9% from the previous month, a steeper growth rate than consensus projections. The data helped players to reaffirm positive prospects for the Japanese economy. Stocks which are supported by favorable operating performance forecasts, including steel and non-ferrous metals, met buying interests.

The pharmaceutical index was up 0.3%, underperforming the market. Kyowa Hakko went up 3.4% after it out-licensed a monoclonal antibody, KW-2871, for the treatment of skin cancer and malignant melanoma to Life Science Pharmaceuticals of the USA. Having been granted an exclusive worldwide license on the compound, LSP will develop it jointly with the USA-based Ludwig Institute for Cancer Research.

Shionogi gained 2.8% after it in-licensed from US firm BioCryst Pharmaceuticals the antiviral Peramivir for the treatment of influenza. Shionogi will commence preparation of Phase I clinical trials in Japan immediately and will pay BioCryst $14.0 million upfront and up to $21.0 million in milestones depending on the progress of the agent's development. Peramivir, a neuraminidase inhibitor, is expected to show activity against influenza A and B virus strains and the H5N1 (bird flu) virus strains.