Bloomberg News

Japanese Stocks Fall on U.S. Jobs; Tepco Plunges to Record Low

June 06, 2011

June 6 (Bloomberg) -- Japanese stocks slid to the lowest level since March, as slowing U.S. jobs growth fueled concern the global economy is weakening and Tokyo Electric Power Co. plunged to a record low.

Monex Group Inc. led brokerages lower on concern investors are making fewer trades. Mitsubishi UFJ Financial Group Inc. lost 3 percent after the Nikkei newspaper said Japan’s biggest publicly traded bank may be forced to hold extra capital reserves. Tokyo Electric, operator of the nuclear plant crippled by the March 11 earthquake and tsunami, plunged 28 percent after a report that Tokyo Stock Exchange President Atsushi Saito said the power company should be put in bankruptcy protection.

“There’s so much uncertainty surrounding what will happen with the utility that it’s impossible to analyze,” Naoteru Teraoka, general manager at Tokyo-based Chuo Mitsui Asset Management Co., which oversees about $28 billion. “The stock moves whenever anybody opens their mouth.”

The Nikkei 225 Stock Average fell 1.2 percent to 9,380.35 as of the 3 p.m. close in Tokyo. The broader Topix lost 1.1 percent to 807.99, the lowest level since March 15. The index has tumbled 13 percent since March 10, the day before the natural disaster that devastated Japan’s northeast coast, leaving almost 24,000 people dead or missing and disabling Tokyo Electric’s Fukushima Dai-Ichi plant.

Trading Volume Falls

Monex declined 3.5 percent to 15,350 yen as trading volume on the Topix fell to about 18 percent below the 12-month average, fueling concern earnings will drop at the online brokerage. Nomura Holdings Inc., Japan’s biggest securities firm, fell 2 percent to 391 yen, while rival Daiwa Securities Group Inc. lost 1.5 percent to 324 yen.

Mitsubishi UFJ declined 3 percent to 359 yen, the single heaviest drag on the Topix. The lender may be classified as a so-called global systemically important financial institution and be forced to hold additional capital buffers equivalent to as much as 3 percent of risk-weighted assets, the Nikkei newspaper reported on June 4. Sumitomo Mitsui Financial Group Inc., Japan’s second-largest publicly traded bank, dropped 1.9 percent to 2,269 yen.

The Standard & Poor’s 500 Index retreated 1 percent on June 3 in New York, declining for a fifth straight week, after the jobless rate unexpectedly climbed to 9.1 percent in May, the highest level this year. A separate report showed payrolls grew at the slowest pace in eight months, showing employers are losing confidence as the economy slows.

U.S. Economy

The report followed lower-than-estimated data on factory orders and consumer confidence, spurring speculation the Federal Reserve may consider a third round of quantitative easing, or “QE3,” to bolster growth.

Tokyo Electric led declines on the Nikkei, plunging 28 percent to 207 yen, its lowest level since the utility started trading in 1951. Kyodo News reported radiation readings from inside the No. 1 reactor building at the Dai-Ichi facility spiked to the highest level yet, almost three months after the disaster started. Separately, the Tokyo Shimbun reported the utility will post a full-year net loss of about 570 billion yen ($7.1 billion).

Tokyo Stock Exchange President Atsushi Saito said the utility should be liquidated along the same lines as Japan Airlines Co., the Asahi newspaper reported. After the report, the TSE said Tokyo Electric doesn’t currently meet requirements for the shares to be delisted.

Bickering in Parliament

Kansai Electric Power Co., Japan’s second-largest utility, tumbled 8.9 percent to 1,202 yen after Mitsubishi UFJ Morgan Stanley Securities Co. cut its target price to 1,350 yen from 2,150 yen. Chubu Electric Power Co. plummeted 8.9 percent to 1,130 yen.

Stocks also fell amid political bickering that threatens to delay passage of a spending package to help tsunami-hit areas in Japan’s northeast. Senior lawmakers of Japan’s ruling party sought to limit Prime Minister Naoto Kan’s tenure in office amid internal divisions over his promise to step down at an unspecified time.

Kan pledge he would step down to appease dissidents in his Democratic Party of Japan and defeat a June 2 parliamentary no- confidence vote. Following the vote, Kan then suggested he might stay on until early next year.

--With assistance from Toshiro Hasegawa in Tokyo. Editors: Jason Clenfield, John McCluskey.

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net.

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


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