May 13 (Bloomberg) -- Japanese stocks fell, sending the Nikkei 225 Stock Average to its fifth day of losses. Resources shares such as Nippon Mining Holdings Inc. led the drop after commodity prices including oil and copper slumped.

``Everyone is debating whether commodity prices will continue to slump,'' said Yoshihisa Okamoto, who helps manage $2.1 billion in assets at Fuji Investment Management Co. in Tokyo. ``The possible impact on earnings at resource companies is scaring away some investors.''

The Nikkei declined 28.83, or 0.3 percent, to 11,049.11 at the 3 p.m. close in Tokyo. The Topix index fell for a fourth day, declining 5.67, or 0.5 percent, to 1134.82. Key indexes completed their fourth weekly decline in five. The Nikkei lost 1.3 percent while the Topix sank 1.4 percent.

The Nikkei rose as much as 0.2 percent after a government report showed machinery orders unexpectedly rose in March. It reversed gains after the report also showed orders will drop in the coming months.

KDDI Corp. led gains among stocks that will be added to the Morgan Stanley Capital International Inc.'s World Index. Thirty- four stocks from Japan will be added to the global index, the most in the region.

About 1.2 trillion yen ($11 billion) in shares included in the Topix traded, 6 percent less than the daily trading average for the past three months. Three stocks fell for every one that gained on the Tokyo Stock Exchange's first section.

Commodities

The Topix Oil & Coal Production Index, which includes Nippon Mining and Nippon Oil, declined 1.6 percent, bringing its gain this year to 16 percent.

Nippon Mining, the country's biggest copper producer, lost 11 yen, or 1.8 percent, to 607. The company earlier this week forecast profit growth will slow this year, attributed in part to an expected decline in copper prices.

Nippon Oil Corp., Japan's biggest refiner, declined 15 yen, or 2 percent, to 724. In March, the company forecast record profit helped by the increase in the value of the refiner's crude oil and fuel supplies.

The Commodities Research Bureau/Reuters Index had its biggest drop since March 23 as crude oil fell below $49 a barrel and copper prices in New York dropped to a three-month low.

``A big red flag for me personally is when my younger sister calls to inform me of an investment that `cannot lose.' Recently her call came touting commodities,'' said Kirby Daley, a strategist at Societe Generale Securities' Fimat unit in Tokyo. ``No market moves one way forever and there has been quite a bit of hype on commodities over the past 12 months.''

Machinery Orders

Some machinery makers advanced after the Cabinet Office said in Tokyo today private machinery orders, excluding shipping and utilities, rose 1.9 percent from February, seasonally adjusted. The median forecast of 30 economists surveyed by Bloomberg News was for a 1.5 percent drop.

Fanuc, Japan's largest maker of industrial robots, gained 110 yen, or 1.7 percent, to 6,420. Murata Manufacturing Co., the world's biggest maker of ceramic parts that regulate electricity in mobile phones and other electronics, climbed 40 yen, or 0.7 percent, to 5,410.

``Today's machinery orders release underscores two points. The first being how difficult it is to predict the monthly numbers and more importantly how economic fundamentals remain stronger than the market reflects,'' said Societe Generale's Daley.

Reversal

The Nikkei erased earlier gains as some analysts focused on the forecast, said Hiroyuki Nakai, chief strategist, at Tokai Tokyo Research Center in Tokyo.

Orders will probably fall 3.1 percent in the second quarter from the first, led by non-manufacturers, according to a survey by the Cabinet Office. It predicted a 0.3 percent increase for manufacturers and a 6.1 percent drop for non-manufacturers.

KDDI, Japan's second-largest mobile phone company, added 11,000 yen, or 2.3 percent, to 500,000. Bank of Kyoto Ltd., a regional bank, advanced 29 yen, or 3.2 percent, to 944.

The index changes will be effective as of the close of trading on May 31, MSCI said. More than $3 trillion in funds are benchmarked to MSCI's indexes. Managers whose funds track MSCI's indexes typically mimic the changes.

Kanebo Slides

Kanebo Ltd., which received the largest bailout of a manufacturing company by the government, slumped by the daily exchange-imposed limit of 80 yen to 373. The stock's 18 percent drop was the biggest among the stocks traded on the first section.

The Tokyo Stock Exchange yesterday said the stock will be removed from the bourse after saying last month that former management of the Japanese consumer goods company overstated earnings by 210 billion yen over five years.

The stock was also removed from the MSCI Indexes.

Kanebo's place in the Nikkei will be handed to Mitsui Chemicals Inc., according to a release from Nihon Keizai Shimbun Inc., the compiler of Japan's benchmark indexes.

Mitsui Chemicals lost 22 yen, or 3.4 percent, to 617, after reaching its highest since April 2004.

Rohm Co., a maker of chips for mobile phones, dropped 530 yen, or 5.1 percent, to 9,900 after the company said full-year profit unexpectedly fell a third because prices for light- emitting diodes, handset chips and other components declined.

In contrast, Tokyo Electron Ltd., the world's second-largest supplier of chip-making equipment, added 120 yen, or 2.2 percent, to 5,570. The company said yesterday after the market closed that full-year profit rose more than sevenfold as Asian chipmakers expanded output.

While profit is expected to drop this year comments from the company that there may be some improvement in orders in the second-half helped spur some gains in the stock, said Fuji Investment's Okamoto.

``The question is how are they going to find a pickup in demand at a time when digital electronics makers are forecasting a delay in recovery,'' said Okamoto. ``I don't think the stock gain will last too long.''

Nikkei 225 futures expiring in June slipped 0.4 percent to 11,040 in Osaka and fell 0.3 percent to 11,030 in Singapore.

Bank of Kyoto Ltd. (8369 JT)
Fanuc Ltd. (6954 JT)
Kanebo Ltd. (3102 JT)
Mitsui Chemicals Inc. (4183 JT)
Murata Manufacturing Co. (6981 JO)
Nippon Mining Holdings Inc. (5016 JT)
Nippon Oil Corp. (5001 JT)
KDDI Corp. (9433 JT)
Rohm Co. (6963 JO)
Tokyo Electron Ltd. (8035 JT)

To contact the reporter for this story: Tomoko Yamazaki in Tokyo at tyamazaki@bloomberg.net.

Last Updated: May 13, 2005 03:43 EDT