Bloomberg News

Nikkei 225 Falls to Lowest Since 2009 on Greece Default Concern

September 12, 2011

Sept. 12 (Bloomberg) -- Japanese stocks fell for a second day, with the Nikkei 225 Stock Average dropping to its lowest in almost two and a half years, as exporters and banks tumbled amid speculation Greece may be nearing default.

Sony Corp., which gets 21 percent of its sales in Europe, fell 3.4 percent as the yen’s advance to a 10-year high against the euro dimmed the earnings outlook. Mitsubishi UFJ Financial Group Inc., Japan’s biggest lender by market value, declined 2.7 percent on concern Europe’s debt crisis will hurt the global financial system. Sharp Corp. plunged 5 percent after Mizuho Securities Co. cut its target price on the maker of flat screens.

The Nikkei 225 fell 2.3 percent to 8,535.67 in Tokyo, the lowest close since April 2009. The broader Topix slid 1.9 percent to 741.26 as speculation Germany is preparing for a Greek default spurred turmoil in equity markets worldwide.

“Rising default risks in Greece are stoking concerns about the financial system, which makes you think about the Lehman shock,” said Mitsuo Shimizu, an analyst at Cosmo Securities Co. in Tokyo.

Futures on the Standard & Poor’s 500 Index dropped 1.3 percent today. The index fell 2.7 percent on Sept. 9 in New York after three German officials said Chancellor Angela Merkel’s government is making plans to shore up banks if Greece defaults. The European Central Bank said Juergen Stark resigned from the executive board, suggesting policy makers are divided over how to fight the debt crisis.

‘Default Risks’

“As long as Europe is divided, we won’t see a clear direction about whether Greece will default or be rescued,” said Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which oversees about $104 billion. “The Nikkei could extend losses to 8,300 or 8,400. If the U.S. slips into a recession, the index could fall even further.”

Group of Seven finance chiefs meeting in Marseille, France, over the weekend vowed to support banks amid growing concern that Europe’s debt crisis is morphing into a banking crisis.

The Topix has lost about 18 percent this year amid concern U.S. growth is sputtering and Europe’s debt crisis will damage the banking system, damping demand in two of Japan’s biggest export markets. The decline has cut the price of shares on the index to 0.89 times book value, the lowest since March 2009.

Exporters fell as the yen touched 104.10 per euro today, the strongest level since 2001. A stronger yen hurts Japanese exporters because it reduces the value of overseas income.

Exporters, Banks Drop

Sony fell 3.4 percent to 1,504 yen. Toyota Motor Corp., the world’s biggest carmaker, slid 2.1 percent to 2,625 yen. Honda Motor Co. lost 3.8 percent to 2,259 yen after the carmaker said it is recalling 310,773 Pilot SUVs to fix seat-belt stitching that can unravel during a crash.

Japanese banks dropped amid speculation Europe’s sovereign debt crisis will spread to the financial sector. Mitsubishi UFJ dropped 2.7 percent to 323 yen. Sumitomo Mitsui Financial Group Inc., the country’s second-largest publicly traded lender, slid 2.4 percent to 2,080 yen. Mizuho Financial Group Inc., the third biggest, dropped 1.8 percent to 111 yen.

Sharp, Japan’s No. 1 maker of liquid-crystal displays, sank 5 percent to 585 yen after Mizuho Securities cut the company’s target price to 630 yen from 750 yen. Sharp may have to book an impairment loss on its Sakai factory, the brokerage said.

--Editors: Jason Clenfield, Nick Gentle.

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@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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