June 4 (Bloomberg) -- Japan’s Nikkei 225 Stock Average snapped a six-day winning streak on reports the U.S. service sector and job market worsened.

Panasonic Corp., the world’s No. 1 maker of plasma televisions, dropped 1.5 percent, while Mazda Motors Corp. lost 2.3 percent. Kawasaki Kisen Kaisha Ltd., Japan’s third-largest shipper, fell 3.5 percent after rising in seven of the past eight days. Nomura Holdings Inc., Japan’s top brokerage, jumped 3.5 percent after Fitch Ratings affirmed debt ratings on the U.S. and U.K., easing concern borrowing costs will increase. T&D Holdings Inc., the nation’s largest listed life insurer, surged 5.9 percent after UBS AG rated it a “buy.”

The Nikkei 225 fell 72.71, or 0.8 percent, to close at 9,668.96 in Tokyo, snapping its longest stretch of gains since Jan. 7. The broader Topix slipped 3.51, or 0.4 percent, to 910.99, with 23 of its 33 industry groups declining.

“Shares of electronics and automakers have overheated,” said Mitsushige Akino, who oversees about $632 million at Ichiyoshi Investment Management Co. in Tokyo. “That’s true for shipping and resource-related companies too.”

The Institute for Supply Management’s index of non- manufacturing businesses, which make up almost 90 percent of the U.S. economy, climbed less than forecast to 44 from 43.7 in April. Economists predicted the index would rise to 45. A separate report showed U.S. companies cut 532,000 workers from payrolls.

Capital Spending

Japanese corporations cut spending for an eighth quarter in the period ending in March, as a slump in global demand eroded earnings, leaving less money for plant and equipment, the Ministry of Finance said today. Profits tumbled a record 69 percent compared with a year earlier, according to the report.

Panasonic dropped 1.5 percent to 1,355 yen, while Canon Inc., which gets 28 percent of its sales in the Americas, lost 1.3 percent to 3,120 yen. Mazda retreated 2.3 percent to 251 yen, Toyota Motor Corp. fell 0.5 percent to 3,810 yen, and Honda Motor Co. lost 1.2 percent to 2,840 yen.

Kawasaki Kisen fell 3.5 percent to 440 yen. Its shares have gained 12 percent in the past month, as commodities prices and transport fees surged. Rival Nippon Yusen K.K. declined 4.5 percent to 444 yen. Shipping lines had the sharpest loss among Topix groups.

Trading companies also fell. Mitsui & Co., Japan’s second- largest trading house, dropped 1.8 percent to 1,261 yen, while rival Marubeni Corp. fell 0.9 percent to 455 yen.

Borrowing Costs

“Earnings haven’t recovered yet and investors aren’t convinced they’re going to improve dramatically. In that environment, people sell shares that look overheated,” said Hideo Arimura, who oversees the equivalent of $2.1 billion at Mizuho Asset Management Co. “The sell-off of resource-related companies suggests the market isn’t convinced in this recovery.”

Japanese shares pared losses after David Riley, Fitch’s head of sovereign ratings, said at a conference in Sydney that the ratings agency has confidence in the ability and track record of the U.S. and U.K. “to do the right thing.”

“If you can allay concern that the U.S. debt-rating will be downgraded, that’ll help invite investors back into the market,” said Naoki Fujiwara, who oversees about $6.1 billion at Shinkin Asset Management Co. in Tokyo. “Long-term U.S. interest rates impact the cost of raising money domestically, so there’s some relief about the outlook for borrowing costs for banks and insurance companies.”

Plug-In Cars

Nomura jumped 3.2 percent to 762 yen, reversing a drop of 0.8 percent. Closest rival Daiwa Securities Group Inc. added 1.3 percent to 626 yen. Mitsubishi UFJ Financial Group Inc. also bounced back from losses, adding 2 percent to 626 yen.

T&D surged 5.3 percent to 2,760 yen after UBS initiated coverage of the insurer with a “buy” recommendation and gave the shares a 12-month price estimate of 3,400 yen. Sompo Japan Insurance Inc. added 1.5 percent to 702 yen.

Mitsubishi Motors Corp. bucked declines among automakers, rising 12 percent to 171 yen, the highest since Sept. 30. The Asahi newspaper said today the company will sell plug-in electric vehicles in Japan by 2013.

To contact the reporters on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net.

Last Updated: June 4, 2009 03:04 EDT