Bloomberg News

Japan Stocks Fall as Ratings Firms Say EU Summit Produced Little

December 12, 2011

Dec. 13 (Bloomberg) --?Japanese stocks fell, with the Nikkei 225 Stock Average erasing yesterday’s gains, after ratings companies said last week’s European summit did little to resolve the debt crisis that has roiled markets this year.

Honda Motor Co., Japan’s second-largest carmaker by market value, fell 2.6 percent. Chip-related companies including Tokyo Electron Ltd. slid after bellwether Intel Corp. cut its sales forecast. Olympus Corp. rose for a third day on speculation the scandal-hit company won’t miss a deadline tomorrow for reporting earnings that would have forced it to be delisted.

The Nikkei 225 declined 1.4 percent to 8,529.14 at the 11:30 a.m. lunch break in Tokyo. The broader Topix index lost 1.1 percent to 738.54. The gauge has seesawed this week, as investors weigh the impact of the region’s fifth agreement in 19 months on the crisis.

“Nothing new came of last week’s European summit,” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co. “If EU nations get downgraded, funding costs in the region will definitely rise.”

The Standard & Poor’s 500 Index slid 1.5 percent yesterday in New York after Moody’s Investors Service said last week’s European summit didn’t produce “decisive” measures to end the crisis. Fitch Ratings said the summit did little to ease pressure on Europe’s sovereign bond ratings. Futures on the S&P 500 index gained 0.2 percent today.

‘Negative News Flows’

“The market is pricing in possible downgrades to a degree, but people have a sense that this will not lead to a financial crisis,” said Kazuyuki Terao, chief Investment Officer of RCM Japan Co.

Exporters of cars and electronics contributed the most to the Topix’s decline. Honda dropped 2.6 percent to 2,392 yen. Toyota Motor Corp., which may lose its ranking this year as the world’s largest automaker, slid 1.4 percent to 2,580 yen. Sony Corp., Japan’s No. 1 exporter of consumer electronics, fell 3 percent to 1,381 yen.

Makers of semiconductors and chip-making equipment dropped after Intel, the world’s largest chipmaker, cut its sales forecast. The Santa Clara, California-based company said flooding in Thailand had caused a shortage of hard-disk drives that is forcing computer makers to cut production.

Tokyo Electron, Japan’s biggest manufacturer of chipmaking gear, fell 2.3 percent to 4,075 yen. Advantest Corp., a maker of memory-chip testers, slid 2.1 percent to 804 yen. Renesas Electronics Corp., the world’s largest producer of microcontrollers used in cars, dropped 3.5 percent to 520 yen.

Olympus gained the most on the Nikkei 225, rising for a third day amid speculation it will meet a deadline for reporting earnings tomorrow. The company said yesterday it plans to release its second-quarter earnings by Dec. 14. Tokyo Stock Exchange rules require the company to be delisted if it misses the deadline.

Shares of the optical equipment maker advanced 6.5 percent to 1,385 yen.

--Editors: Jason Clenfield, Jim Powell.

To contact the reporter on this story: 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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