June 29 (Bloomberg) -- Japanese stocks fell for the first time in four days as plans by Daiwa Securities Group Inc. and Mizuho Financial Group Inc. to sell new shares raised concern shareholder value will be diluted.

Daiwa, Japan’s No. 2 brokerage, lost 12 percent, the sharpest decline in nine years, after announcing its first public offering in two decades. Mizuho, the third-biggest bank by market value, dropped 3.4 percent after people familiar with the deal said the bank may start selling shares as early as this week. Oji Paper Co., the nation’s biggest user of high-sulfur fuel oil, climbed 2.2 percent as crude prices fell.

The Nikkei 225 Stock Average lost 93.92, or 1 percent, to close at 9,783.47 in Tokyo. The broader Topix Index fell 11.48, or 1.2 percent, to 915.32. Two stocks slid for each that rose.

“Revenue from broking remains stagnant, demand for merger and acquisitions won’t recover anytime soon and investment banking isn’t as profitable as before,” said Masaru Hamasaki, a Tokyo-based senior strategist at Toyota Asset Management Co., which oversees $15 billion. “Investors are skeptical Daiwa’s share sale will offset the negative impact of dilution.”

The Nikkei has gained 2.7 percent this month, set for a fourth monthly advance, on speculation the worst of the global recession is over. Companies on the gauge traded at 41.7 times estimated net income on June 26, compared with 15.6 times for the Standard & Poor’s 500 Index.

Daiwa plunged 12 percent to 587 yen, the steepest tumble since April 2000 and the biggest loser on the MSCI World Index. The brokerage will raise about 240 billion yen ($2.5 billion) in a share sale to expand its retail business and operations in emerging markets, Daiwa said on June 26.

Industrial Production

Stocks rose in the morning session after a Trade Ministry report on factory output stoked optimism the nation’s economy was recovering. Industrial production rose 5.9 percent in May from the previous month, the Ministry said. Output gained at the same pace in April, which was the biggest jump in a half century.

Mizuho’s stock started to fall in the afternoon after two people with knowledge of the matter said the company may start selling about 600 billion yen of shares as early as this week. Mizuho, also the country’s No. 2 listed bank, had said on May 15 it plans to sell shares within a year after a loss in the year to March 31.

Mizuho dropped 3.4 percent to 229 yen, while market leader Mitsubishi UFJ Financial Group Inc. sank 2.8 percent to 595 yen. Banks contributed the most to the Topix’s retreat.

Mitsui O.S.K. Lines Ltd., Japan’s No. 2 shipping line, sank 3.1 percent to 618 yen, and smaller rival Kawasaki Kisen Kaisha Ltd. fell 3.4 percent to 398 yen. The Baltic Dry Index, a measure of transport costs for commodities, lost 9 percent last week, the biggest weekly drop since the five days ended April 3.

Lower Costs

Oji, Japan’s No. 1 papermaker, jumped 2.2 percent to 412 yen, leading its peers to the biggest gain among the Topix’s 33 industry groups. Rengo Co., the nation’s biggest maker of cardboard boxes, leapt 3.9 percent to 617 yen.

Crude oil dropped 1.5 percent to $69.16 a barrel on June 26 and extended its decline today. A $1 change in a barrel of crude alters Oji’s manufacturing costs by about 200 million yen a year, the company said last month.

Inpex Corp., the nation’s largest oil explorer, lost 2.5 percent to 735,000 yen, while Japan Petroleum Exploration Co. retreated 2.4 percent to 4,990 yen. Mitsubishi Corp., a trading company that gets more than half its sales from resources, lost 3 percent to 1,759 yen.

Nikkei futures expiring in September declined 0.8 percent to 9,820 in Osaka and dropped 0.9 percent to 9,820 in Singapore.

To contact the reporters for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

Last Updated: June 29, 2009 03:19 EDT