Bloomberg News

Japan Stocks Fall Third Day as Tankan Drops, Europe Woes Flare

December 15, 2011

Dec. 15 (Bloomberg) --?Japanese stocks fell for a third day after manufacturing sentiment worsened and rising financing costs fueled concern Europe is losing its fight against debt.

Toshiba Corp., a maker of laptop computers, home appliances and power plants, dropped 3.8 percent. Mitsui O.S.K. Lines Ltd. led declines among top shipping companies as cargo rates fell. Nintendo Co., which depends on Europe for a third of its sales, dropped 2 percent as a weakening euro eroded the gamemaker’s profit. Olympus Corp. plunged after restated earnings showed the camera-maker inflated its assets by $1.3 billion.

The Nikkei 225 Stock Average fell 1.7 percent to 8,377.37 at the 3 p.m. trading close in Tokyo. The broader Topix index dropped 1.6 percent to 725.02 after the Bank of Japan’s Tankan survey showed Europe’s crisis and gains in the yen have dented confidence at some of the country’s biggest companies.

“Japan is highly vulnerable to overseas factors,” said Naoteru Teraoka, general manager at Tokyo-based Chuo Mitsui Asset Management Co., which oversees about $29 billion. “Europe’s situation doesn’t seem to be moving in a positive direction, while the euro has fallen a lot against the yen -- another headache for exporters.”

An index of sentiment among large manufacturers fell to minus 4 from 2, the central bank said today in Tokyo. Economists surveyed by Bloomberg predicted a reading of minus 2. A negative number means pessimists outnumber optimists. Japan’s biggest manufacturers said they expect conditions to worsen next quarter.

Floods, Earthquake

Europe’s crisis has hurt Japan’s export-driven economy. Floods in Thailand and Japan’s worst earthquake on record have added to the damage, disrupting production at companies from Toyota Motor Corp. to Sony Corp. The Topix has plunged 19 percent this year, almost as much as the 21 percent decline on the Stoxx Europe 600 Index.

Japanese manufacturers plunged today after the Tankan showed confidence eroding. Hitachi Construction Machinery Co. fell 4.1 percent 1,298 yen. Daikin Industries Ltd., a maker of air conditioners, slid 2.8 percent to 2,133 yen.

Toshiba fell 3.8 percent to 328 yen. The maker of everything from nuclear power plants to flash memory chips also dropped after a brokerage cut its price target for Sumco Corp., a top supplier of silicon wafers for semiconductors and a bellwether of industry demand.

Sumco sank 8.3 percent to 578 yen, the lowest since at least November 2005, after SMBC Nikko Securities Inc. cut its 12-month price estimate to 700 yen. Separately, Credit Suisse Group AG said the earnings environment “remains severe” for Sumco because of slumping demand for personal computers.

Shipping Slide

The shipping sector declined today the most among the 33 Topix industry groups. Mitsui O.S.K. Lines, Japan’s second- largest line by sales, slid 5.5 percent to 273 yen. Nippon Yusen K.K., the No. 1, dropped 4.6 percent to 187 yen.

The Topix group that tracks container lines has fallen by half this year. Shippers are losing money on Asia-Europe routes after slashing rates more than 50 percent in 2011 due to a price war and excess capacity.

Futures on the Standard & Poor’s 500 Index dropped 0.5 percent today. The index fell 1.1 percent in New York yesterday after Italy was forced to offer the highest yields in 14 years to sell five-year bonds. Stocks also fell after Federal Reserve Chairman Ben S. Bernanke told U.S. senators the Fed plans no additional aid to Europe, according to two lawmakers who attended the meeting.

‘No Visible Progress’

“There’s no visible progress on Europe’s debt crisis,” said Mitsushige Akino, who oversees about $600 million in Tokyo at Ichiyoshi Investment Management Co. “There are no events that may buoy the mood, and there’s no guarantee that the euro will stop weakening. The euro may drop below 100 yen, compounding the situation for export-related stocks.”

Exporters declined after the shared currency slid to 101.10 yen yesterday, the lowest level since Oct. 4. Nintendo dropped 2 percent to 10,900 yen. Honda Motor Co., Japan’s second-largest carmaker by market value, slid 1.8 percent to 2,290 yen.

Olympus plunged 21 percent to 1,041 yen. The company yesterday filed corrected financial statements for more than five years and took a $1.3 billion hit in net assets. The shares have lost more than half their value since Oct. 14, when allegations emerged the company overpaid advisors. Olympus has said it used the payments to hide investment losses.

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

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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