Bloomberg News

Japanese Stocks Decline as Euro Weakens Amid Debt Crisis Concern

January 06, 2012

Jan. 6 (Bloomberg) -- Japanese stocks declined, with the Nikkei 225 Stock Average falling for the week, as pessimism on the European debt crisis overshadowed data showing strength in the U.S. economy.

Sony Corp., which depends on Europe for a fifth of its sales, slid 2 percent after the euro fell to an 11-year low against the yen. Mitsubishi Corp., Japan’s biggest commodities trader by sales, lost 1.3 percent after oil and metal prices declined. Kawasaki Kisen Kaisha Ltd. led drops among shipping lines after cargo rates fell the most since October 2008.

The Nikkei 225 slipped 1.2 percent to 8,390.35 at the 3 p.m. close in Tokyo. For the week, the gauge slid 0.8 percent as France’s borrowing costs rose, refocusing attention on Europe’s debt burden. The broader Topix fell 0.9 percent to 729.60 today, ending the week up slightly.

“There’s concern that the euro’s weakness is going to continue,” said Naoki Fujiwara, who helps oversee $6 billion at Shinkin Asset Management Co. in Tokyo. “It’s a big negative for Japanese exporters.”

Futures on the Standard & Poor’s 500 Index fell 0.2 percent today. The gauge rose 0.3 percent yesterday in New York as government data showed fewer Americans filed claims for unemployment insurance last week. A separate report showed consumer confidence in the world’s biggest economy rising to a five-month high.

Europe’s Debt

Japanese stocks fell today after investors demanded higher yields at France’s first debt auction of the year. Euro-zone members including Italy and Spain may sell bonds totaling as much as 262 billion euros ($335 billion) in the first quarter, according to Deutsche Bank AG forecasts.

“Italy, Spain and other European countries are going to be rolling over a lot of debt,” Shinkin Asset’s Fujiwara said. “That’s weighing on the yen and it’s a burden for Japan.”

Exporters to Europe declined. Sony fell 2 percent to 1,345 yen. Nippon Sheet Glass Co., a glassmaker that generates about 40 percent of its sales in Europe, lost 2.8 percent to 140 yen.

The euro fell, with the 17-nation currency dropping to 98.48 yen last night, its lowest since December 2000.

Higher borrowing costs in France also sparked a drop in oil prices. Crude oil for February delivery lost 1.4 percent to $101.81 a barrel yesterday in New York, its first drop in three days. The London Metal Exchange Index of prices for six commodities including copper and aluminum slid 0.5 percent.

Trading Houses, Shippers

Mitsubishi fell 1.3 percent to 1,546 yen. Mitsui & Co., a trading house that counts commodities as its biggest source of profit, dropped 1 percent to 1,199 yen.

Shipping lines declined the most among the 33 Topix industry groups after the Baltic Dry Index, a measure of shipping costs for commodities, yesterday plunged 8.1 percent to its lowest since Aug. 18.

Nippon Yusen K.K., the country’s biggest shipping company by sales, lost 3 percent to 192 yen. Mitsui O.S.K. Lines Ltd. slid 4.7 percent to 282 yen, while Kawasaki Kisen sank 5 percent to 133 yen.

Japanese stocks plunged last year amid a surge in the yen, natural disasters and nuclear meltdowns at Tokyo Electric Power Co.’s Fukushima Dai-Ichi power plant. The Topix dropped 19 percent in 2011, eclipsing an 11 percent decline on the Stoxx Europe 600 Index, ground zero for the debt crisis.

The following were among the most active shares in the Japanese market today. Stock symbols are in parentheses after company names.

Engineering companies: Japan Bridge Corp. (5912 JT) and other builders gained after Daiwa Securities Group Inc. said possible highway repairs in the Tokyo area may contribute to earnings. Japan Bridge surged 19 percent to 380 yen. P.S. Mitsubishi Construction Co. (1871 JT) soared 16 percent to 335 yen, while Miyaji Engineering Group Inc. (3431 JT) jumped 9 percent to 193 yen.

Chip-related firms: Elpida Memory Inc. (6665 JT), Renesas Electronics Corp. (6723 JT) and other companies in the industry declined. Nomura Holdings Inc. cut its growth forecast for global shipments of dynamic random access memory to 2.7 percent from 3.7 percent after prices of the chips used to help computers juggle programs plunged. Elpida, which also fell after Deutsche Bank AG cut its stock price estimate to 400 yen from 500 yen, sank 5.4 percent to 331 yen. Renesas lost 3 percent to 455 yen. Advantest Corp. (6857 JT), which makes chip testers, slid 3.3 percent to 706 yen.

Gulliver International Co. (7599 JT), a used-car retailer, retreated 6 percent to 2,923 yen, its lowest since June 17. The company said net income fell 30 percent to 3.62 billion yen in the nine months ended Nov. 30, citing changes in accounting and disaster-related losses.

JFE Holdings Inc. (5411 JT), Japan’s second-largest steelmaker, dropped 2.5 percent to 1,352 yen. A fire broke out at one of the company’s facilities near Tokyo, Kyodo News reported.

JVC Kenwood Corp. (6632 JT), a home-electronics maker, rallied 9.2 percent to 286 yen after its largest shareholder, Panasonic Corp. (6752 JT), said it planned to sell most of its JVC stake. Panasonic fell 0.3 percent to 654 yen.

Mitsui Chemicals Inc. (4183 JT) fell 4.2 percent to 229 yen. JPMorgan Chase & Co. cut its investment rating on the company to “neutral” from “overweight,” citing the yen’s appreciation and a possible slump in demand for semiconductors and factory automation equipment. Mitsubishi Chemical Holdings Corp. (4188 JT) slid 3 percent to 423 yen.

Mitsui Mining & Smelting Co. (5706 JT) declined 4 percent to 194 yen after Mitsubishi UFJ Morgan Stanley Securities Co. cut its rating to “neutral” from “outperform,” citing slumping demand for metals used for electronics.

Tokyo Tatemono Co. (8804 JT) climbed 3.7 percent to 251 yen after Credit Suisse Group AG raised its target price to 330 yen from 320 yen, maintaining its “outperform” rating. The developer will probably return to profit in the year ending December and resume dividend payments, Credit Suisse said in a report yesterday.

--With assistance from Satoshi Kawano in Tokyo. Editors: Jim Powell, Jason Clenfield.

To contact the reporter on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net

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


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