Bloomberg News

Japan Stocks Drop Before U.S. Job Report, Amid Political Tussle

June 03, 2011

June 3 (Bloomberg) -- Japanese stocks declined for a second day as investors awaited a U.S. jobs report expected to show hiring slowed in the world’s biggest economy and after Prime Minister Naoto Kan survived a no-confidence vote, setting the stage for a succession battle.

Nissan Motor Co., an automaker that gets about 80 percent of its revenue overseas, fell 1 percent. Nikon Corp. lost 2.2 percent after Deutsche Bank AG cut the camera maker’s rating to “hold.” Inpex Corp. sank 3.8 percent, leading declines among oil producers after a Saudi Arabian official said OPEC is ready to raise crude output to meet demand. Tokyo Electric Power Co. slumped 6.2 percent after saying contaminated water at its crippled nuclear power plant may overflow from service trenches.

The Nikkei 225 Stock Average fell 0.7 percent to 9,492.21 at the 3 p.m. close in Tokyo, after earlier advancing as much as 0.5 percent. Stocks swung between gains and losses ahead of a U.S. Labor Department report forecast to show non-farm payrolls grew in May at the slowest pace in four months. The jobs report is due today in Washington.

“Investors are worried about the U.S. economy and how the chaos in Japanese politics will affect the country’s rebuilding process,” said Masaru Hamasaki, who helps oversee the equivalent of $18 billion as chief strategist at Toyota Asset Management Co. in Tokyo.

Earthquake, Tsunami

The broader Topix fell 1.1 percent to 816.57, pushing the gauge to a decline of 1 percent for the week. The index has tumbled 12 percent since March 10, the day before the earthquake and tsunami that devastated Japan’s northeast coast, leaving almost 24,000 people dead or missing and disabling Tokyo Electric’s Fukushima Dai-Ichi plant.

Kan yesterday survived a no-confidence vote in parliament by appeasing dissident members of his own party with an offer to step down once the nation’s worst postwar crisis is contained. The promise triggered a contest to select Japan’s next leader, adding to the risk that reconstruction bills will be delayed.

Stocks retreated after the yen appreciated, cutting the value of overseas earnings for Japan’s exporters. Nissan declined 1 percent to 773 yen. Canon Inc., which gets most more than 80 percent of its sales outside of Japan, fell 0.6 percent to 3,860 yen

Yen Strengthens

Japan’s currency appreciated to as high as 80.65 against the dollar today in Tokyo, compared with 80.89 when stock trading opened. Against the Euro, the yen gained to 116.77 from 117.18.

Nikon slid 2.2 percent to 1,832 yen after Deutsche Bank cut its investment rating to “hold” from “buy,” saying the prospects for an earnings recovery in semiconductor equipment are “unclear.”

Oil-related companies fell the most on the Topix. Inpex sank 3.8 percent to 553,000 yen and Japan Petroleum Exploration Co., the nation’s second-largest oil explorer, slid 3.7 percent to 3,675 yen after Saudi Oil Minister Ali Al-Naimi made comments that could limit gains in crude prices.

The Organization of Petroleum Exporting Countries is ready to increase oil supplies if needed, Al-Naimi said ahead of a meeting of leaders from the Organization of Petroleum Exporting Countries next week in Vienna.

Mitsubishi Corp., Japan’s biggest commodities trader, dropped 1.4 percent to 1,988 yen after the London Metal Exchange Index lost 2.2 percent yesterday, the biggest drop since May 23. Mitsubishi Materials Corp. lost 2.1 percent to 238 yen.

Tokyo Electric slumped 6.2 percent to 286 yen. The utility said the amount of contaminated water accumulated at its stricken Fukushima plant increased to about 105 million liters (28 million gallons).

Among stocks that advanced, Kubota Corp. gained 3.4 percent to 727 yen after the Nikkei newspaper reported the maker of farm equipment may post operating profit of more than 100 billion yen ($1.2 billion) this fiscal year.

--With assistance from Satoshi Kawano in Tokyo. Editors: Jason Clenfield, Sam Waite.

To contact the reporter on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.


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