Nov. 12 (Bloomberg) -- Japanese stocks fell for a second day after a decline in crude oil prices to nearly a 20-month low and a drop in copper prices signaled a deeper slump in the global economy.

Inpex Corp., Japan's biggest energy explorer, dropped 5.4 percent after cutting its forecast on the tumble in crude. Mitsubishi Corp., which gets more than half its profit from commodities, sank 8.1 percent as copper hit a three-year low. Sumitomo Rubber Industries Ltd. climbed 4.8 percent as oil fell below $60, lowering the company's production costs. Mobile-phone carrier Softbank Corp. soared 16 percent after Chinese affiliate Alibaba.com Ltd. reported a surge in third-quarter profit.

The Nikkei 225 Stock Average lost 113.79, or 1.3 percent, to close at 8,695.51 in Tokyo, the first time its daily change was smaller than 2 percent in four weeks. The broader Topix index retreated 14.13, or 1.6 percent, to 875.23, as more than two shares slumped for each that rose.

``If falling commodity prices fail to stimulate demand, resource-dependent companies can't avoid a drop in earnings,'' said Hisakazu Amano, head of fund management at T&D Asset Management Co., which oversees about $39 billion. ``Investors are waiting for a sign of recovery in the global economy.''

A Topix gauge of mining companies outperformed the broader index this year as crude marched toward a record $147.27 in July. The industry group has since fallen by more than half, while crude closed near a 20-month low of $59.33 yesterday on speculation the International Energy Agency will cut its 2009 demand forecast. Copper futures sank 5.9 percent to the lowest level since September 2005.

Falling Sentiment

Japan's consumer confidence fell in September to the lowest level on record, the Cabinet Office said today, echoing a record low for merchant sentiment the government announced yesterday. Prime Minister Taro Aso last month pledged to give 2 trillion yen ($20 billion) to households to mitigate the impact of the economic slowdown and a 43 percent plunge in the Nikkei this year.

Inpex slid 5.4 percent to 510,000 yen, the lowest since Oct. 29. The company yesterday cut its annual net income target by 15 percent, prompting UBS AG to more than halve its 12-month price estimate on the stock to 680,000 yen. A $1 price drop for a barrel of oil cuts Inpex's annual profit by 2.2 billion yen, the company said in May.

Mitsubishi, Japan's largest trading company by value, sank 8.1 percent to 1,387 yen, while Nippon Mining Holdings Inc., the nation's largest copper producer, dived 9.5 percent to 256 yen. Gauges of mining companies and trading houses were the biggest losers among 33 industry groups on the Topix.

`Bleakest Picture'

Sumitomo Rubber added 4.8 percent to 833 yen, while Bridgestone Corp., the world's largest tiremaker, gained 2.3 percent to 1,709 yen. About 60 percent of the material used in tires is oil based, according to the Japan Automobile Tyre Manufacturers Association.

Japan stocks briefly pared losses in the afternoon session as investors swooped in on cheap shares. The Nikkei's price-book ratio reached 1.03 as of yesterday, and 63 percent of its constituents traded at below book value, suggesting that the companies are worth less than the value of their assets alone.

``When the Nikkei's price-book ratio falls below one, investors buy in the market because of cheapness,'' said Masanori Ikunaga, who helps manage about $4.1 billion at Sumitomo Mitsui Asset Management Co. ``The uptrend doesn't usually last long, as economic indicators are showing the bleakest picture.''

Nissay Dowa General Insurance Co., the nation's second- smallest insurer by value, jumped 5.9 percent to 523 yen. Seven Bank Ltd., an affiliate of Seven & I Holdings Co., Japan's largest retailer, added 2.2 percent to 333,000 yen. The stocks were among five chosen to join MSCI Inc.'s global indexes after Nov. 25, raising their attractiveness as funds tracking the gauges will have to buy these shares.

Softbank Surges

Machine maker Okuma Corp. slumped 10 percent to 435 yen, while CSK Holdings Corp., a computer-services provider, dived 7.9 percent to 769 yen. They were among six Japanese companies removed from MSCI indexes, the gauge provider said yesterday.

Softbank soared by its daily limit of 16 percent to 1,445 yen, the highest close since Sept. 29. Alibaba.com, China's biggest trading Web site for businesses, reported a 49 percent jump in third-quarter profit. Softbank holds a 29 percent stake in Alibaba.com's parent company, Alibaba Group Holding Ltd., making it the No. 2 shareholder after Yahoo! Inc.

``As expansion into overseas markets is an issue for Japanese wireless carriers, Softbank's investment in China's Internet business is outstanding,'' Daisaku Masuno, an analyst for Nomura Securities Co., wrote in a Japanese-language report today. Alibaba's results ``reconfirmed the company's business opportunities.''

Nikkei futures expiring in December dipped 0.5 percent to 8,740 in Osaka and Singapore.

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

Last Updated: November 12, 2008 03:15 EST