Tepco shares surge 32% in Tokyo trade

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Shares in Tokyo Electric Power Co. Closed limit up on Wednesday, gaining 32.12 per cent in Tokyo trade with sentiment buoyed after the Japanese Government put forward a support bill, analysts said.

The bill to ensure Tepco can meet what is expected to be massive compensation payments over the accident at its stricken Fukushima Daiichi nuclear plant still needs to be approved by Parliament.

Dealers said the reinstatement of tougher margin rules by the Tokyo Stock Exchange, effective on Tuesday, is also seen as share-price supportive in that it deters short sellers.

Tepco shares rose by their daily limit for the second consecutive day, adding 80 yen to 329 on Wednesday.

The rebound comes after the stock plunged to all-time lows amid a lack of clarity over the level of government support for the utility and worries it would be delisted from the stock exchange.

However, “shares are reacting bullishly as fears of delisting are dissipating,” said Kenichi Hirano, operating officer at Tachibana Securities.

If approved by Parliament, the support bill will see the creation of a body to handle claims made against Tepco and will be funded by public money as well as contributions from power companies.

The government-devised aid plan for Tepco will include the purchase of its corporate bonds, stocks and assets to support the company’s operations, but analysts warned that uncertainty still surrounded the bill.

Its passage through parliament is expected to be difficult given political Opposition to it and an uncertain climate after Prime Minister Naoto Kan announced he will resign in the near future.

The longer Kan stays in office, the greater the downside risk becomes for Tepco’s credit ratings, UBS Securities Japan head of credit research Fumihito Gotoh said in a note dated on Tuesday.

“One of key areas of focus is when the Japanese Parliament will start the deliberation of the compensation support bill,” he said. “What is going to happen at the deliberation remains unclear.”

In May, Tepco posted a record annual net $15 billion loss, the biggest ever for a non-financial Japanese firm, and its president resigned over the crisis amid concerns the company would buckle under compensation and decommissioning costs.

Its shares have lost 85 per cent of their March 10 value, the day before Japan was struck by a record 9.0 magnitude earthquake and a tsunami that crippled cooling systems at the Fukushima plant, triggering reactor meltdowns.

The disaster prompted Japan to review plans to boost its use of atomic power as tens of thousands of people remain evacuated from homes, farms and businesses in a 20-kilometre (12-mile) zone around and also beyond the radiation-spewing plant.