Bloomberg News

Japan, Australian Stock Futures Fall on Europe Concern

April 24, 2012

Japanese shares dropped for a fourth day after the Dutch prime minister resigned over austerity measures, deepening concern over Europe’s debt crisis, and a leading gauge of China’s economic growth slowed.

Canon Inc. (7751), a camera maker that counts Europe as its biggest market, lost 1.1 percent. TDK Corp. (6762), a manufacturer of electronic parts which gets almost a third of its revenue from China, declined 0.8 percent. Advantest Corp., the world’s largest producer of memory-chip testers, rose 4.5 percent on a report it probably recorded its first profit in three quarters.

“There’s more and more concern that Europe’s efforts to rein in its debt is hurting its ability to grow,” said Akio Yoshino, who helps oversee the equivalent of $31 billion as chief economist at Amundi Japan Ltd. in Tokyo. “If growth in the region worsens more than expected, then the effort to deal with the debt will be overshadowed by the economy’s contraction.”

The Nikkei 225 Stock Average (NKY) fell 0.8 percent to 9,468.04 at the 3 p.m. close in Tokyo. Volume was almost a quarter lower than the 30-day average. The broader Topix (TPX:US) Index lost 0.7 percent to 803.94, with more than twice as many shares declining as advancing.

The Topix has fallen 5.6 percent since March 27, as investors refocused on Europe’s debt crisis and slowing Chinese growth and a sputtering U.S. recovery weighed on global equities.

Futures on the Standard & Poor’s 500 Index (SPX) rose 0.3 percent today. The gauge dropped 0.8 percent in New York yesterday as a revolt against spending cuts in budget-conscious Netherlands prompted Prime Minister Mark Rutte to step down. French President Nicholas Sarkozy lost the first round of his election bid as concern intensified over Europe’s debt crisis.

Canon slipped 1.1 percent to 3,745 yen. Sony Corp. (6758), a consumer electronics maker that gets more than a fifth of its revenue in Europe, lost 1.7 percent to 1,330 yen.

Dutch PM Resigns

Rutte’s resignation is “creating an aura of uncertainty and that’s the last thing that investors need,” said Angus Gluskie, managing director at White Funds Management in Sydney who manages more than $350 million. “This is destabilizing for the markets as a whole. Europe is still really the focus.”

Stocks also declined as a euro-area composite index based on a survey of purchasing managers in the services and manufacturing industries fell to a five-month low, London-based Markit Economics said in an initial estimate yesterday.

Companies tied to China also dropped after the Conference Board’s Leading Economic Index for that country rose at a slower pace in March, adding to evidence growth in the world’s second- biggest economy is moderating. The gauge tracks data such as lending activity, consumer expectations and exports.

China Stocks Fall

“China accounts for a quarter of Japan’s exports so if China’s economy weakens it’s a real concern for Japan,” said Amundi Japan’s Yoshino.

TDK Corp. fell 0.8 percent to 4,270 yen. Fanuc Corp. (6954), a maker of robotics for mainland factories, declined 0.8 percent to 14,410 yen.

Shares also fell as the yen appreciated to as high as 80.86 against the dollar today in Tokyo, compared with 81.31 at the close of stock trading yesterday. Japan’s currency strengthened to 106.32 against the euro from 107.25. A stronger yen reduces overseas income at Japanese companies when repatriated.

Advantest Corp. (6857) gained the most on the Nikkei 225, jumping 4.5 percent to 1,168 yen, after the Nikkei newspaper said its operating profit probably reached more than 6 billion yen ($74 million) in the quarter ended March, buoyed by growing shipments.

-- With assistance from Adam Haigh in Sydney. 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: John McCluskey at j.mccluskey@bloomberg.net


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