Bloomberg News

Japanese Stocks Decline on U.S. Jobs, Euro Crisis Concern

August 24, 2012

Japanese shares declined, with the Nikkei 225 Stock Average falling the most since July 25, after U.S. unemployment claims rose more than expected and concern intensified that European leaders are making little progress on the debt crisis.

Nissan Motor Co. (7201), a carmaker that counts North America as its biggest market, slid 1.5 percent. Ricoh Co., an office- equipment company that gets more than a fifth of its revenue in Europe, sank 2.5 percent. Steelmakers declined after the U.S. sector was downgraded by Dahlman Rose & Co. on speculation prices may have peaked. Osaka Securities Exchange Co. plunged 16 percent after Tokyo Stock Exchange Group Inc.’s tender offer for its rival succeeded.

The U.S. jobless data “reignited investor concern about the economic future,” said Kenichi Kubo, a senior fund manager at Tokio Marine Asset Management Co., which oversees about 5.6 trillion yen ($71 billion). “It’s the most reliable data I look at as its correlation with economic conditions and share movements are consistently high.”

The Nikkei 225 (NKY) fell 1.2 percent to 9,070.76 at the 3 p.m. close in Tokyo, declining 1 percent on the week. Volume on the gauge was almost 30 percent below the 30-day average. The broader Topix (TPX) Index lost 1 percent to 757.23, with almost three times as many shares declining as advancing.

The Topix has fallen 13 percent from this year’s peak on March 27 on concern earnings will be hurt by Europe’s debt crisis and slowing growth in China and the U.S. The decline has cut the price of shares on the gauge to 0.9 times book value, compared with 2.2 for the Standard & Poor’s 500 Index and 1.4 for the Europe Stoxx 600 Index. A number less than one means companies can be bought for less than the value of their assets.

U.S. Employment

Futures on the S&P 500 added 0.1 percent today. The gauge slid 0.8 percent yesterday, the biggest drop in a month after a report showed the number of applications for unemployment benefits climbed last week to a one-month high. Jobless claims rose for a second week to 372,000, exceeding the 365,000 median forecast of economists surveyed by Bloomberg.

Nissan, which gets almost a third of its revenue from North America, fell 1.5 percent to 765 yen. OKK Corp., a machine-tools maker that gets almost 25 percent of its sales from the U.S., slipped 2 percent to 96 yen.

Exporters to Europe also declined after German Chancellor Angela Merkel said Europe is in one of its deepest crises, while the country’s finance minister, Wolfgang Schaeuble, said allowing Greece more time to meet its debt obligations would not solve the country’s problems.

Ricoh lost 2.5 percent to 625 yen. Roland Corp., a maker of electronic musical instruments that gets a third of its sales from Europe, sank 3.5 percent to 608 yen.

Bourse Merger

Osaka Securities Exchange tumbled by its daily limit of 70,000 yen to 367,500 yen, the biggest drop since at least April 2004. The Tokyo Stock Exchange yesterday said it received more than the maximum number of shares sought in a tender for its rival. UBS AG cut the stock’s target price to 300,000 yen from 390,000 yen, saying profitability will be lower after the merger with the Tokyo bourse.

Steelmakers declined after Dahlman Rose analyst Anthony Rizzuto downgraded steel producers in the U.S., saying recent price increases aren’t matched internationally. Iron ore with 62 percent iron content delivered to the Chinese port of Tianjin sank 4.9 percent to $99.60 a dry ton yesterday, falling below $100 for the first time since 2009, according to a gauge compiled by The Steel Index Ltd.

Nippon Steel Corp., Japan’s largest steelmaker, fell 1.2 percent to 172 yen. JFE Holdings Inc. sank 3.5 percent to 1,072 yen.

Utilities gained the most among the Topix’s 33 industry groups. The shares rose after Kansai Electric Power Co. was raised to buy at Goldman Sachs Group Inc. on prospects for hikes in power rates. Kansai Electric jumped 5.8 percent to 697 yen, the largest gainer on the Nikkei 225. Chubu Electric Power Co. climbed 2.5 percent to 1,036 yen.

-- 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: Nick Gentle at ngentle2@bloomberg.net


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