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Yen and Nikkei rally with Koizumi's landslide victory
London: Reacting positively to a landslide election win by the Japanese prime minister Junichiro Koizumi the yen rallied against the euro on Monday, while the Nikkei closed at its highest level since 2001.

Koizumi's Liberal Democratic Party won 296 seats in the 480-seat lower house of parliament, receiving a thumping response to their plans for market-friendly reforms.

Foreign buyers continue to snap up Japanese shares on expectations that reforms of the Japanese postal system, which has US$3 trillion in assets, will get the go ahead. Analysts said that while a Koizumi win was factored in, a decisive victory will now enable Koizumi to push ahead with his reform agenda with a much freer hand.

Data showing Japan's economy grew faster in the second quarter than initially estimated also supported the market. The Nikkei closed up 1.6 percent at 12,896.4 points, with other Asian indexes also up as crude oil prices fell below $64 a barrel.
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Germany: Euro falls, as support for Merkel appears to slip
Bonn: The euro fell to a two-week low against the dollar and yen as polls showed German opposition leader Angela Merkel may be forced to share power with Chancellor Gerhard Schroeder's party after next week's national election.

Analysts said that the market had been hoping for a strong majority for Merkel and a mandate for reforming German's economy, but with her chances appearing to slip, the Euro has come in for some hammering. Voter surveys in the past week have shown Merkel's lead over Schroeder's Social Democrats dwindling, reducing the chances she will be able to push through welfare cuts and make it easier to hire and fire workers.

The euro dropped 1 percent to US$1.2284 in New York, from $1.2408 on Sept. 9. The 12-nation currency weakened to 134.96 yen from 136.11. Declines in the euro accelerated after a drop below $1.2380 triggered automated selling orders, Merkel is promising cuts in welfare spending and a loosening of labor laws in Germany, where unemployment has risen to the highest levels since World War II. Among her proposals is suspending legal protection against unfair dismissal for companies with 20 workers or fewer.
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