Bloomberg News

Japanese Stocks Fall on German Debt Sale, U.S. Economic Outlook

November 24, 2011

Nov. 24 (Bloomberg) -- Japanese stocks dropped for a fourth day as Germany failed to find enough buyers at a debt sale and U.S. consumers pulled back on spending while manufacturers received fewer orders.

Nintendo Co., the gaming-console maker that gets 39 percent of its sales from the Americas, dropped 4.2 percent on speculation shipments to the U.S. will fall as consumer spending weakens. Mizuho Financial Group Inc., Japan’s third-largest bank by market value, fell 1 percent on concern Europe’s worsening debt crisis will hurt bank earnings. JFE Holdings Inc. dropped 1.7 percent after the Nikkei newspaper reported the steelmaker is reducing its production target.

“Sentiment is quite bad amid concerns about the U.S. economy and Europe’s worsening debt crisis,” said Ayako Sera, strategist at Sumitomo Trust & Banking Co. in Tokyo. “Cash is king for investors in this kind of environment. The biggest problem in Europe is there is no strong political leadership to address the crisis.”

The Nikkei 225 Stock Average slid 1.8 percent to 8,165.18 in Tokyo, its lowest close since March 2009. The index extended its decline after Standard & Poor’s Singapore-based director Takahira Ogawa said the rating agency may be getting closer to trimming Japan’s sovereign debt grade.

The Nikkei declined 7.5 percent this month through Nov. 22, erasing October’s gains as signs emerged that Europe’s debt crisis is spreading. Japanese markets were closed yesterday for a holiday. The broader Topix Index dropped 1.6 percent to 706.08, with more than five stocks declining for each that rose.

Tempered Expectations

Exporters fell as slower growth in consumer spending and fewer durable goods orders last month in the U.S. tempered expectations that growth will pick up in the world’s biggest economy in the fourth quarter.

Nintendo slid 4.2 percent to 10,850 yen. Mazda Motor Corp., a carmaker that gets 19 percent of sales from the U.S., slipped 2.3 percent to 130 yen. Canon Inc., the world’s biggest camera maker, lost 1.2 percent to 3,265 yen.

Financial stocks declined as borrowing costs in Europe surged and the euro declined after Germany failed to get bids for 35 percent of the 10-year bonds offered at auction yesterday.

Mizuho Financial fell 1 percent to 99 yen. Sumitomo Mitsui Financial Group Inc., Japan’s second-biggest lender, declined 1.9 percent to 2,029 yen.

Nomura Holdings Inc., the nation’s largest brokerage, sank 5.5 percent to 224 yen. The company plans to cut 1,000 jobs, the Asahi newspaper reported, without saying where it obtained the information.

German Debt

“The market has finally realized that Germany has a high level of public debt,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “Germany looks to be losing its safe-haven status, and it highlights the extent to which the European debt crisis has deteriorated. It can be only bad news for risky assets like equities.”

JFE Holdings fell 1.7 percent to 1,253 yen. The steelmaker will produce 300,000 tons less than it forecast last month because of floods in Thailand and the global economic slowdown, the Nikkei newspaper reported, citing the company.

Machinery makers dropped after a preliminary survey yesterday showed Chinese manufacturing may contract this month by the most since 2009 and European industrial orders posted the biggest decline in almost three years in September.

Fanuc Corp., a maker of industrial robots, fell 3.3 percent to 11,850 yen. Yamatake Corp., a supplier of industrial automation equipment, slid 1.7 percent to 1,604 yen.

Among stocks that advanced, Olympus Corp., the scandal-hit maker of cameras and endoscopes, jumped 17 percent to 1,019 yen. Former President Michael C. Woodford arrived in Japan for the first time since he was ousted last month, setting up a showdown with the fellow board members who fired him.

--With assistance from Yoshiaki Nohara and Kana Nishizawa in Tokyo. Editors: John McCluskey, Jim Powell.

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net.

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


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