Bloomberg News

Japanese Stocks Decline 2nd Day as Fed Offers No New Stimulus

December 13, 2011

Dec. 14 (Bloomberg) --?Japanese stocks edged lower after the U.S. Federal Reserve offered no new measures to spur growth. Losses were limited on speculation shares are cheap.

Sony Corp., which depends on the U.S. for a fifth of its revenue, fell 1 percent. Toyota Motor Corp. slid 0.6 after a report the carmaker cut a production goal. Nexon Co., a South Korean maker of online games that started trading in Tokyo today, slipped after Japan’s biggest initial share offering this year.

The Nikkei 225 Stock Average fell 0.6 percent to 8,505.26 as of the 11:30 a.m. trading break in Tokyo after dropping as much as 0.7 percent. The broader Topix Index slid 0.6 percent to 736.14 after the Fed stopped short of offering another round of large-scale asset purchases to boost the economy.

“Nothing came out of the Fed meeting and that’s negative for the markets,” said Shintaro Takeuchi, a portfolio investment manager at Tokio Marine & Nichido Fire Insurance Co., which oversees the equivalent of $111 billion. “Still Japanese stocks are cheap so the downside impact should be limited.”

Futures on the Standard & Poor’s 500 Index rose 0.2 percent today. The index dropped 0.9 percent in New York yesterday after a report showed U.S. retail sales gained last month at the slowest pace since June.

The Fed said in a statement that the U.S. economy continues to expand even as global growth slows. The statement reiterated a warning from the Fed’s two previous meetings that “strains in global financial markets continue to pose significant downside risks to the economic outlook.”

Sony, Honda Drop

Exporters to the U.S. fell, with Sony dropping 1 percent to 1,372 yen. Honda Motor Co., which counts the North America as its biggest market, slid 2.4 percent to 2,326 yen.

Stocks also declined after German Chancellor Angela Merkel signaled she doesn’t support expanding the size of a planned permanent rescue fund for Europe. Merkel told German lawmakers that a 500 billion-euro cap on the fund will stay in place, two officials with knowledge of the discussion said.

“Germany won’t strengthen its support unless there’s a consensus that its own economy and financial institutions will be hurt by what happens in the rest of the region,” said Hitoshi Asaoka, a senior strategist in Tokyo at Mizuho Trust & Banking Co. “There still isn’t a sense of shared destiny.”

Toyota fell 0.6 percent to 2,572 yen. The carmaker cut its target for production next year to 8.4 million units, the Tokyo Shimbun reported. Shares have lost 20 percent this year.

Nexon’s Down Debut

Nexon, an online game creator that’s more profitable than Zynga Inc., fell on its first day of trading to 1,294 yen from its initial offering price of 1,300 yen per share. Rival DeNA Co., which operates the Mobage gaming site, dropped 2.8 percent to 2,321 yen.

Japanese companies this year have had share prices hit by more than Europe’s sovereign-debt crisis. The yen’s rise to a postwar high against the dollar and disruptions to production from floods in Thailand and the country’s worst earthquake on record have sent the Topix down about 18 percent since January, compared with a 19 percent decline on the Stoxx Europe 600 Index.

The decline has cut the price of shares on the Topix to 0.89 times estimated book value, near the lowest since March 2009, according to Bloomberg data. Almost 70 percent of the companies on the listed on the index are trading below book value, according to Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc.

““There’s increasing appetite for dip-buying,” Nishi said. “Stocks probably won’t drop much lower.”

--With assistance from Satoshi Kawano in Tokyo. Editor: 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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