Bloomberg News

Japan’s Nikkei 225 Declines Seventh Day on Stronger Yen

November 13, 2012

Japanese stocks fell, with the Nikkei 225 (NKY) Stock Average capping its longest losing streak in seven months, as the yen strengthened against all its major peers, hurting the earnings outlook for exporters.

Canon Inc. (7751), a camera maker that gets almost a third of its sales in Europe, dropped 0.5 percent after the euro weakened as the currency bloc struggled to agree on Greek aid. Shimizu Corp. (1803) fell 5.4 percent to lead declines on the Nikkei 225 after the contractor cut its earnings forecast. Kyushu Electric Power Co. led utilities higher after Nomura Holdings Inc. raised its target price.

“The market does not like it when the yen strengthens,” said Masaru Hamasaki, Tokyo-based chief strategist at Toyota Asset Management Co., which manages the equivalent of $23 billion. “It’s as simple as that.”

The Nikkei 225 dropped 0.2 percent to 8,661.05 at the 3 p.m. close in Tokyo, falling for a seventh straight day and reversing early gains of as much as 0.5 percent after the yen strengthened. Volume on the Nikkei was more than 20 percent below the 30-day average. The broader Topix (TPX) was little changed 722.56, with about four shares dropping for every three that gained.

The Topix has dropped 4.2 percent since Oct. 19 as 55 percent of the companies on the gauge that reported quarterly earnings missed analysts’ estimates, according to data on 273 corporate results. Shares on the measure traded at 0.9 times book value, compared with 2.1 for the Standard & Poor’s 500 Index and 1.5 for the Europe Stoxx 600 Index.

Yen Gains

The yen appreciated to as high as 100.43 against the euro today in Tokyo, compared with 101.15 when the stock market opened. Against the dollar, Japan’s currency strengthened to 79.23 from 79.61. A stronger yen cuts overseas income at Japanese companies when converted into their home currency.

European finance ministers struggled to agree on Greek aid, curbing demand for the common currency and pushing the yen higher. Luxembourg’s Prime Minister Jean-Claude Juncker said European ministers will meet again on Nov. 20 to discuss Greece, putting off a decision on how to cover the nation’s need for additional financing of as much as 32.6 billion euros ($41 billion).

Canon fell 0.5 percent to 2,441 yen. Brother Industries Ltd., a maker of office equipment that gets more than 75 percent of its sales overseas, lost 1.3 percent to 683 yen, a seventh straight decrease.

Computer Outage

Futures on the Standard & Poor’s 500 Index slid 0.6 percent today. The S&P 500 closed yesterday little changed, failing to rebound from its biggest weekly retreat since June.

Shimizu sank 5.4 percent to 226 yen after slashing its full-year net-income forecast 45 percent to 5.5 billion yen ($69 million), citing domestic construction projects and unexpected costs. The company’s equity rating was cut to underperform from neutral by Credit Suisse Group AG.

Among companies that gained, Kyushu Electric jumped 5.3 percent to 655 yen after Nomura raised the stock price estimate on the utility to 640 yen from 560 yen. Kansai Electric Power Co. gained 3.3 percent to 632 yen after the Mainichi newspaper reported it may get about 300 billion yen in loans.

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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