Jan. 17 (Bloomberg) -- Nippon Paper Group Inc., Japan's second-biggest papermaker, fell the most in a month in Tokyo trading after the company said it falsified the percentage of recycled paper used in its products.

The shares dropped 9,000 yen, or 2.9 percent, to close at 298,000 yen on the Tokyo Stock Exchange, the biggest decline since Dec. 17.

Nippon Paper, which trails Oji Paper Co. in the domestic market, has been falsifying data since 1996 to make it appear it was meeting recycled paper volume requirements, it said in a release distributed at the exchange yesterday.

``The impact caused by the falsification will be limited as the company will be able to avoid a business suspension order,'' Yumi Nishimura, an equity marketing manager at Daiwa Securities SMBC Co., said.

Following the announcement, other major papermakers, including Daio Paper Corp., Hokuetsu Paper Mills Ltd. and Mitsubishi Paper Mills Ltd., also issued releases acknowledging similar falsifications.

Nippon Paper President Masatomo Nakamura will step down to take responsibility for the matter, company spokeswoman Miho Fujita said. She didn't say when the resignation would take effect.

Nippon Paper, based in Tokyo, said it used only 1 percent recycled paper in New Year's cards supplied to Japan's postal service, which officially requires 40 percent.

Fuji Xerox Co., a Japanese copier manufacturer, said today that it has suspended recycled copy and printing paper purchases from Nippon Paper, according to the company's Web site. Canon Marketing Japan Inc. and Konica Minolta Holdings Inc. may also suspend purchases, the Nikkei newspaper reported, without saying who gave it the information.

Daio Paper shares declined 0.5 percent to 853 yen. Hokuetsu Paper fell 2 percent to 504 yen. Mitsubishi Paper rose 1 percent to 209 yen.

To contact the reporters on the story: Akiko Ikeda at iakiko@bloomberg.net; Satoshi Kawano at skawano1@bloomberg.net.

Last Updated: January 17, 2008 03:12 EST