Japan stocks dragged by share dilution worries

TOKYO

Japanese stocks retreated Thursday, as steep declines among pharmaceuticals and shipping companies wiped out initial momentum.

The benchmark Nikkei 225 stock average fell 67.19 points, or 0.7 percent, to 9,804.49. The broader Topix index 0.5 percent to 867.70.

The day started out in positive territory after an overnight rise on Wall Street and further signs of a global economic recovery.

But sentiment fizzled in the afternoon on concerns about shares being diluted. Nippon Yusen K.K., Japan's biggest shipping line, said it plans to raise up to 142.49 billion yen by issuing new shares. The new shares would represent about 37 percent of its outstanding stock.

The announcement sunk the entire sector, with Nippon Yusen losing 4 percent to 314 yen in heavy volume. Mitsui O.S.K. Lines closed down 1.5 percent at 532 yen, and Kawasaki Kisen Kaisha Ltd. plunged 6 percent to 310 yen.

Pharamceuticals also dragged on the market after a government unit said it has decided to lower new drug prices to match generic medication levels.

Takeda Pharmaceutical Co. fell 1.4 percent to 3,520 yen, and Daiichi Sankyo Co. was down 1.6 percent at 1,690 yen.

Japan's top three automakers beat the downbeat mood. Toyota Motor Corp. added 2.6 percent to 3,520 yen, Honda Motor Co. rose 1.8 percent to 2,905, and Nissan Motor Co. closed up 1.4 percent at 662 yen.

Deutsche Securities analyst Kurt Sanger was particularly bullish on Honda.

"Technologically, the company is well positioned with expected improvements in core engines coupled with a profitable business model for mass-produced (hybrid electric vehicles)," Sanger said in a note to clients.

In currencies, the dollar slipped to 89.78 yen from 89.84 yen. The euro stood at $1.4990 from $1.4977.