Bloomberg News

Japanese Stocks Drop as Investors Eye Greek Vote, U.S. Shoppers

June 27, 2011

June 27 (Bloomberg) -- Japanese stocks fell the most in more than a week ahead of a vote in Greece’s parliament that may forestall a European banking crisis and before a report expected to show slowing growth in U.S. consumer spending, dimming the outlook for export earnings.

Sony Corp. which sells about 20 percent of its PlayStation game consoles and other products in Europe, dropped 2.1 percent. Toyota Motor Corp., the world’s biggest carmaker by sales, fell 2.3 percent. Mitsubishi UFJ Financial Group Inc., the country’s biggest lender by market value, erased losses after Goldman Sachs Group Inc. said capital requirement rules agreed to by international regulators are “positive” for Japan’s lenders.

The benchmark Nikkei 225 Stock Average fell 1 percent to 9,578.31 at the 3 p.m. close in Tokyo. The broader Topix index retreated 0.9 percent to 825.64. Trading volume on the main board of the Tokyo Stock Exchange was a third less than this year’s average as investors awaited the vote in Greece and reports on U.S. consumer spending and Japanese manufacturing.

“It’s not easy for investors to get bullish with all of these unresolved things waiting out there,” said Naoki Fujiwara, who helps oversee $6 billion at Shinkin Asset Management Co. in Tokyo. “It’s unclear whether Greece will be able to pass its reconstruction plans.”

‘Spill-Over’

The Topix has lost 11 percent since March 10, the day before a magnitude-9 earthquake and tsunami devastated Japan’s northeast coast, triggering the worst nuclear accident in 25 years and leaving more than 23,000 people dead or missing.

Japanese shares have also declined on signs the U.S. economic recovery is slowing and amid a debt crisis in Greece that the International Monetary Fund said may “spill over,” hurting banks in the region that hold the country’s bonds.

Sony lost 2.1 percent to 2,033 yen. Fanuc Corp., a maker of industrial robots that gets 11 percent of its sales in Europe, lost 2.1 percent to 12,630 yen.

Shares fell ahead of a vote in Greece’s parliament expected on June 29 on a five-year austerity plan that must pass for the cash-strapped nation to secure more international aid. Greece needs loans from Europe and the IMF to cover 6.6 billion euros ($9.4 billion) of maturing bonds in August.

The Topix rose last week the most in almost a year after European leaders said Greece is getting closer to meeting conditions for a rescue, easing concern the country will suffer a default that destabilizes the region’s banking system.

U.S. Consumers

Stocks also declined today ahead of a report expected to show growth in consumer spending is slowing in the world’s biggest economy. The U.S. Commerce Department may say today that consumer spending grew last month at its slowest pace since June 2010, with outlays rising 0.1 percent, according to the median estimate of economists surveyed by Bloomberg. Spending increased 0.4 percent in April.

Toyota, whose biggest market is the U.S., sank 2.3 percent to 3,210 yen. Kyocera Corp., a maker of solar panels which gets more than 20 percent of sales in the U.S., sank 1.3 percent to 8,100 yen.

Trading companies dropped as concern the U.S. expansion is slowing weighed on oil prices. Mitsubishi declined 1.2 percent to 1,960 yen. Mitsui & Co., Japan’s second-largest trading company, dropped 1.1 percent to 1,346 yen.

Banks Pare Declines

Banks pared earlier losses after Goldman Sachs said capital requirement rules agreed to by global regulators are “positive” for Japan’s lenders.

Mitsubishi UFJ erased losses of as much as 1.3 percent, finishing the day unchanged. Sumitomo Mitsui Financial Group Inc., Japan’s second-largest bank by market value, gained 0.2 percent to 2,404 yen after earlier dropping 1.5 percent.

The Basel Committee on Banking Supervision said on June 25 the world’s largest banks must hold as much as 2.5 percentage points in additional capital as part of efforts to prevent another crisis like the one that stemmed from the 2008 bankruptcy of Lehman Brothers Holdings Inc. Although it’s not clear which lenders would be subject to the rules, Goldman Sachs analysts led by Philippa Rogers said Japan’s top banks have sufficient capital and won’t have to raise funds.

Japan’s central bank will announce the country’s most- closely watched survey of manufacturer sentiment on July 1. The Bank of Japan’s quarterly Tankan index of confidence among big manufacturers probably fell to minus 7 in June from 6 in March, the biggest drop since March 2009, according to the median estimate of economists surveyed by Bloomberg. A negative number means pessimists outnumber optimists.

Post-Quake Tankan

This week’s survey is the first to fully reflect the impact of Japan’s record earthquake and tsunami on March 11. About three quarters of the responses in the previous survey were submitted before the disaster.

Among stocks that rose, Tokyo Electric Power Co., operator of the crippled Fukushima Dai-Ichi power plant, climbed 2.6 percent to 316 yen. The Yomiuri newspaper reported the utility may sell two units as part of restructuring plans.

Nakabayashi Co., a maker of office equipment, soared by its upper daily limit of 29 percent to 221 yen, the biggest gain since at least June 1981. The Osaka-based company will start selling a battery in early August that can be recharged by adding water, beer, saliva or any other fluid, it said June 24.

--With assistance from Satoshi Kawano and Toshiro Hasegawa in Tokyo. Editor: Jason Clenfield, Drew Gibson.

To contact the reporter for this story: Akiko Ikeda in Tokyo at iakiko@bloomberg.net.

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


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