Japan stock market week to March 6, 2006

Japan stock market week to Mar 6, 2006

Tokyo saw a retreat in the week to March 6. The Nikkei 225 fell 1.8% to close below the 16,000 mark following a three-day consecutive setback mid-week. The market rebounded in the last trading day, with buying of export-oriented issues in the wake of the resumed weakness of the yen against the US dollar. However, the daily rebound was not strong enough to gain back mid-week losses. The Topix index declined 1.8%. The pullback was basically caused by concerns about the Bank of Japan's policy changes. The consumer price index for January rose 0.5% year-on-year, showing the third consecutive increase. The steep rise of the index caused investors to anticipate that the Bank of Japan may move to discontinue its ultra-easy monetary policy.

The pharmaceutical index was up 1.3%, outperforming the market. Takeda advanced 1.7%, responding to the news that it had selected LG474, a target for drug discovery in cardiovascular area, discovered by Lexicon Genetic of the USA in its "Genome5000" program and has paid research milestone worth $5.0 million to Lexicon. The payment was based on the initial agreement between the two companies signed in July 2004, which allows Takeda an exclusive access to all drug targets for a three-year term. The share performance was also assisted by the report that the US District Court in Chicago had dismissed a legal action Abbott Laboratories had instituted against Takeda in 2005. In the law suit, Abbott claimed that Takeda allegedly has obtained excessive profits from the supply of the antiulcer agent lansoprazole (US trade name Prevacid) to TAP, a joint venture between the two firms and sought to recover a portion of Takeda's profit. The Japanese drugmaker contended that Abbott must bring its law suit in the Japanese courts based on a shareholders' agreement, which states that any litigation filed by Abbott against Takeda must be in Japan. The court held that the agreement required Abbott to file the law suit in Japan and dismissed and terminated the litigation.