Bloomberg News

Most Japanese Stocks Drop on U.S. Slowdown; Tepco Pares Losses

June 09, 2011

June 9 (Bloomberg) -- Most Japanese stocks declined after the Federal Reserve said the recovery is weakening in some regions of the U.S., sparking concern the world’s biggest economy is slowing.

Honda Motor Co., Japan’s No. 2 carmaker by market value, retreated 0.7 percent. Nintendo Co., a maker of game machines, sank 4.6 percent after UBS AG cut its rating to “neutral.” Tokyo Electric Power Co. closed 4 percent lower after falling as much 26 percent following power failures yesterday at the utility’s crippled Fukushima Dai-Ichi nuclear plant.

The Topix lost 0.2 percent to 812.95 at the 3 p.m. close in Tokyo, with about eight shares dropping for every seven that gained. The Nikkei 225 Stock Average rose 0.2 percent to 9,467.15, after reversing an earlier loss of as much as 0.7 percent.

“Investors are likely to become more, rather than less concerned about the U.S. in the short term.” Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which oversees about $104 billion. “From the point of view of valuations, stocks are cheap enough that there isn’t a strong impetus to sell.”

The Topix has tumbled 13 percent since March 10, the day before a magnitude-9 earthquake and tsunami devastated Japan’s northeast coast, damaging Tokyo Electric’s Fukushima Dai-Ichi plant, disrupting supply chains, and leaving almost 24,000 people dead or missing.

‘Second-Half Recovery’

Stocks slipped even after a report showed Japan’s economy in the first quarter shrank less than the government initially expected. Gross domestic product contracted 3.5 percent in the three months ended March 31, the Cabinet Office said today in Tokyo, compared with an earlier estimate of 3.7 percent. Economists surveyed by Bloomberg predicted a 3 percent contraction.

“Investors understand that the contraction in the economy was unavoidable after the quake,” Kenji Sekiguchi, general manager at Mitsubishi UFJ Asset Management Co., which oversees the equivalent of $75 billion. “The market is looking past these numbers and people are expecting a recovery in the second half.”

The Standard & Poor’s 500 Index fell 0.4 percent yesterday in New York, sending the gauge to its longest losing streak since February 2009, as raw-material and financial shares slumped amid growing concern the economy is slowing.

U.S. Economy

The Federal Reserve yesterday said that while the economy expanded at a “steady pace” in most of the U.S., it weakened in four of 12 regions where consumers are contending with higher food and fuel prices and shortages of auto parts after Japan’s March disaster hampered factory production.

Honda declined 0.7 percent to 2,958 yen. Toyota Motor Corp., the world’s biggest carmaker, sank 0.6 percent to 3,270 yen. Ricoh Co., an office equipment maker that gets more than half of its revenue outside of Japan, slumped 0.4 percent to 864 yen.

Nintendo lost 4.6 percent to 16,160 yen, extending yesterday’s 5.7 percent drop after it unveiled a new game console that disappointed analysts. UBS cut the company’s rating to “neutral” from “buy” in a report dated yesterday, saying its new, high-definition game console was “insufficient to encourage past users to return.”

Tokyo Electric, the day’s most-actively traded stock by value, closed 4 percent lower at 192 yen, after earlier plunging as much as 26 percent. The No. 1 and 2 reactors at the Fukushima power station suffered electricity outages yesterday, hindering work to bring radiation leaks under control. The utility said today power has been fully restored.

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

To contact the reporters on this story: Norie Kuboyama in Tokyo at; Toshiro Hasegawa in Tokyo at

To contact the editor responsible for this story: Nick Gentle at

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