Bloomberg News

Japanese Stocks Decline Ahead of Europe Summit; Insurers Fall

October 21, 2011

Oct. 21 (Bloomberg) -- Japanese stocks fell, extending losses for the week on the Nikkei 225 Stock Average, as European leaders mulled a $1.3 trillion bailout fund ahead of a summit on the region’s debt crisis this weekend.

Mitsubishi UFJ Financial Group Inc., Japan’s biggest lender by market value, dropped 0.6 percent. Tokio Marine Holdings Ltd. led declines among Japan’s biggest non-life insurers after Jefferies Group Inc. cut ratings to “underperform.” Enplas Corp., a producer of plastic parts used in cars and electronics, jumped 8.6 percent after posting a narrower loss than forecast.

The Nikkei 225 was little changed at 8,678.89 at the 3 p.m. close in Tokyo, ending the week 0.8 percent lower. The broader Topix index fell 0.2 percent to 744.21 ahead of a meeting of European leaders this weekend in Brussels. The gauge has dropped 17 percent this year amid concern Europe’s debt crisis will spread to banks.

“There’s a lot of information and a lot of uncertainty whether this weekend’s meeting will come out with a definitive plan,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion. “The market is still very unsure.”

Futures on the Standard & Poor’s 500 Index added 0.4 percent today. The index rose 0.5 percent yesterday in New York. Stocks rose after a report that Europe may combine temporary and permanent rescue funds to make as much as 940 billion euros ($1.3 trillion) available to fight the crisis, according to two people familiar with the matter.

Another Summit

Japanese stocks fluctuated before finishing down today on concern European policy makers will struggle to reach a resolution at the summit on Oct. 23. German Chancellor Angela Merkel and French President Nicolas Sarkozy said in a joint statement they want euro-region leaders to agree on a “comprehensive and ambitious” plan as the European Union plans a second summit within three days of this weekend’s meeting.

“It looks like Europe is gradually getting its act together on a rescue plan for the debt crisis,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc. “Still, investors are going to keep sitting on the fence and trading is going to be light.”

Mitsubishi UJF lost 0.6 percent to 335 yen. Mizuho Financial Group Inc., Japan’s third-biggest lender, dropped 0.9 percent to 110 yen. Resona Holdings Inc., the fourth-largest, fell 1.5 percent to 330 yen.

Insurers, Steelmakers

Non-life insurers declined after Jefferies cut their ratings to “underperform’ on concern natural disasters in Thailand and Japan will hurt earnings. Tokio Marine, Japan’s biggest casualty insurer, slumped 4.1 percent to 1,763 yen. MS&AD Insurance Group Holdings Inc. sank 3.7 percent to 1,518 yen. NKSJ Holdings Inc. fell 2.7 percent to 1,551 yen.

Japan’s biggest steel producers declined. The nation’s shipbuilders will ask domestic steel mills to cut prices for plate used to construct vessels or be replaced by rivals from South Korea or China as the yen strengthens, three people familiar with the matter said. JFE Holdings Inc., the nation’s No. 1 producer by sales, slipped 1.3 percent to 1,402 yen. Nippon Steel Corp. fell 1.4 percent to 210 yen. Sumitomo Metal Industries Ltd. lost 0.7 percent to 152 yen.

Among stocks that rose, Enplas Corp. jumped 8.6 percent to 1,561 yen. The company had a net loss of 250 million yen ($3.3 million) for the six months through September, compared with a forecast for a 450 million yen loss, according to a preliminary earnings statement to the Tokyo Stock Exchange.

PanaHome Corp., a builder of prefabricated houses, advanced 2.6 percent to 560 yen. The company said profit beat its forecast by 36 percent, surging to 3 billion yen for the six months through September, as demand for temporary housing increased in the aftermath of the March earthquake.

--With assistance from Masaaki Iwamoto in Tokyo. Editors: Jason Clenfield, Jim McDonald

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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


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