Bloomberg News

Japan Stock Futures Drop on Signs European Crisis Is Worsening

January 04, 2012

Jan. 5 (Bloomberg) -- Japanese stock futures and Australian shares fell after Italy’s biggest bank said it needs to raise more capital, fueling concern that Europe’s debt crisis is worsening.

American depositary receipts of Mitsubishi UFJ Financial Group Inc., Japan’s biggest lender by market value, sank 1.5 percent from the last close in Tokyo. Those of Kyocera Corp., an electronics maker that gets almost 20 percent of its sales in Europe, slid 1 percent after the euro weakened, cutting the earnings outlook for the exporter. BHP Billition Ltd, the world’s largest mining company, fell 1.2 percent after metal prices slid.

Futures on Japan’s Nikkei 225 Stock Average expiring in March closed at 8,520 in Chicago yesterday, compared with 8,530 in Osaka, Japan. The contracts were bid in the pre-market at 8,520 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index fell 1.2 percent today. New Zealand’s NZX 50 Index dropped 0.4 percent in Wellington.

“Problems sparked by the European debt crisis are reigniting and people in the market have reaffirmed that the situation has not changed,” said Mitsushige Akino, who oversees about $600 million in Tokyo at Ichiyoshi Investment Management Co. “That’s weakening the euro and hurting exporters with a heavy reliance on Europe.”

Futures on the Standard & Poor’s 500 Index were little changed today. The gauge closed little changed yesterday in New York, paring an earlier loss of as much as 0.7 percent, as improving sales at retailers and carmakers helped offset lower- than-forecast factory orders.

U.S. equities fell earlier as a report showed bookings for factory goods rose 1.8 percent, less than the median economist forecast for a 2 percent gain in Bloomberg News survey.

Europe Concerns

Global stocks also declined as UniCredit SpA, Italy’s largest bank, said it will sell new shares in a 7.5 billion-euro ($9.8 billion) offer to strengthen its capital position. The European Central Bank reported overnight deposits from financial institutions rose to an all-time high, and Luxembourg Prime Minister Jean-Claude Juncker said the European Union is facing a recession of unknown scope.

The euro dropped toward an 11-year low against the yen as the share offer from UniCredit spurred concern European banks may struggle to raise more capital. The 17-nation currency fell to as much as 99.05 yen today in Tokyo, its lowest level since December 2000. A weaker euro cuts the value of European income at Japanese companies when repatriated.

Copper futures for March delivery declined 2.7 percent yesterday in New York, the biggest drop for a most-active contract since Dec. 14, as signs of faltering European manufacturing and service industries fueled concern that demand for industrial metals will ebb.

Metal Prices

Manufacturing and services output contracted in December for a fourth month in nations that use the euro, Markit Economics said in a report.

The London Metal Exchange Index of prices for six metals including copper and aluminum fell 2.2 percent yesterday.

The Bloomberg China-US 55 Index of the most-actively traded Chinese equities lost 1.2 percent to 97.75 yesterday.

The MSCI Asia Pacific Index declined 17 percent last year. The S&P 500 broke even and the Stoxx Europe 600 Index dropped 11 percent.

--Editors: John McCluskey, Jason Clenfield

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Satoshi Kawano in Tokyo at skawano1@bloomberg.net

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


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