Dec. 19 (Bloomberg) -- Japan stocks fell, led by commodity producers, as the deepening global recession drove oil and metals lower, countering the central bank’s efforts to boost the economy.

Inpex Corp., the nation’s biggest oil explorer, dived 5.9 percent as crude headed for the second-biggest weekly decline in five years. Sumitomo Metal Mining Co., Japan’s No. 2 copper smelter, sank 3.1 percent as prices for the metal reached a five- year low. Daiwa Securities Group Inc. rose to a five-week high on speculation the sale of its Sanyo Electric Co. stake will boost its financial health.

The Nikkei 225 Stock Average fell 78.71, or 0.9 percent, to close at 8,588.52 in Tokyo, trimming a 4.3 percent weekly gain. The broader Topix index dropped 4.26, or 0.5 percent, to 834.43, reducing its weekly advance to 2.6 percent. Shares briefly rose after the Bank of Japan cut its benchmark rate to 0.1 and said it would buy corporate debt as the recession chokes off funding.

“If they really supply a ton of money to the market, I will change my view on the BoJ, but today’s message is not strong enough,” said Masayuki Kubota, a senior fund manager who helps oversee $1.7 billion at Tokyo-based Daiwa SB Investments Ltd. “The actual effect on the economy is not that big.”

The Nikkei has lost 44 percent in 2008, set for its worst year on record, as Japan, the U.S. and Europe entered their first simultaneous recessions since the Second World War. The BoJ’s rate cut from 0.3 percent was the second since October and followed the U.S. Federal Reserve’s reduction of its main interest rate to a record low this week.

Japan’s government has announced three stimulus plans since August to jumpstart the economy, and today pledged to buy shares held by banks to save them from further writedowns.

Oil Slump

The global recession has damped commodities demand, creating a glut of oil that’s driven prices down 75 percent from a record $147.27 on July 11. Crude futures plunged 9.6 percent to $36.22 a barrel in New York yesterday, the lowest settlement since June 2004 and set for a 21 percent drop on the week. Copper futures on the Shanghai Futures Exchange plummeted by the daily limit to the lowest in five years after global inventories climbed.

Inpex dived 5.9 percent to 586,000 yen, sending a gauge of mining companies to the steepest decline among 33 industry groups on the Topix. Mitsubishi Corp., a trading company that gets more than half its earnings from commodities, sank 3.3 percent to 1,166 yen. Sumitomo Metal Mining retreated 3.1 percent to 910 yen.

“The continuous decline in oil is convincing investors that the economic outlook is bleak,” said Hideo Arimura, who oversees about $1.9 billion at Tokyo-based Mizuho Asset Management Co.

Sanyo Sale

The BoJ’s rate cut gave a short-lived boost to real-estate shares on expectations lower borrowing rates will give developers easier access to funding. Mitsubishi Estate Co., Japan’s second- biggest developer, fell 2.9 percent to 1,408 yen after rising as much as 2 percent. Nomura Real Estate Holdings Inc. dropped 2.5 percent to 1,720 yen, erasing an earlier 1.8 percent gain.

Daiwa surged 7.8 percent to 510 yen, the highest close since Nov. 13, while market leader Nomura Holdings Inc. climbed 5.1 percent to 699 yen. Brokerages as a group were the biggest winners on the Topix.

Panasonic Corp., which plans to buy Sanyo stakes held by Daiwa, Sumitomo Mitsui Financial Group Inc. and Goldman Sachs Group Inc., will pay 131 yen a share, two people familiar with the matter said. If Daiwa sells its Sanyo preferred shares, the brokerage will book a pretax gain of 109 billion yen ($1.22 billion), boosting its book value by 8.4 percent, Goldman Sachs analyst Takehito Yamanaka wrote in a note to clients today.

Panasonic today said after the market shut it offered 131 yen for each Sanyo share in Japan’s biggest ever acquisition in the consumer-electronics industry.

Daiichi Sankyo Co., Japan’s third-largest drugmaker, and chemical maker Ube Industries Ltd. soared after an Eli Lilly & Co. drug that the two helped develop was recommended by a European regulatory panel for approval. Daiichi Sankyo gained 5.9 percent to 2,025 yen while Ube surged 10 percent to 231 yen, making it the biggest winner on the Nikkei.

Nikkei futures expiring in March retreated 0.7 percent to 8,600 in Osaka and slumped 1 percent to 8,580 in Singapore.

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

Last Updated: December 19, 2008 03:18 EST