April 14 (Bloomberg) -- Japanese stocks fell, sending the Nikkei 225 Stock Average to a seven-week low. Sony Corp. and Honda Motor Co. paced a decline in exporters after a report showing a smaller-than-expected gain in U.S. retail sales added to evidence energy costs are curbing consumer spending.

Suppliers of semiconductor-making equipment such as Tokyo Electron Ltd. and Nikon Corp. slid after European competitor ASML Holding NV forecast a drop in orders and two industry groups said global sales fell in February for the first time in 19 months.

``There's no reason to be bullish,'' said Naohiko Sasaki, who helps manage $3.4 billion in Japanese equities as co-head of investments at Kokusai Asset Management Co. in Tokyo. ``Worsening consumer spending in the U.S. and the prospects of a slowdown in global growth will have a negative impact on exporters.''

The Nikkei fell 74.35, or 0.6 percent, to 11,563.17 at the 3 p.m. close in Tokyo. The broader Topix index lost 7.97, or 0.7 percent, to 1168.42. The Nikkei fell to it lowest since Feb. 24, while the Topix slumped to a level not seen since Feb. 25.

Kokusai Asset's Sasaki said he's avoiding technology and commodity-related shares, without naming them.

Nikkei 225 futures expiring in June fell 0.9 percent to 11,560 in Osaka and dropped 1 percent to 11,555 in Singapore. Some 1.2 trillion yen in shares traded, 6.5 percent less than three-month, daily average. Five stocks fell for every one that rose on the Tokyo Stock Exchange's first section.

`Vitriolic Rhetoric'

Stocks also fell on concern anti-Japan protests in China and Japan's decision to grant Japanese companies energy drilling rights in an area of the East China Sea claimed by China will cause relations between the two countries to deteriorate further.

China, which surpassed the U.S. as Japan's biggest export market last year, called Japan's East China Sea decision ``a provocation,'' the Xinhua news agency reported, citing Foreign Ministry spokesman Qin Gang.

``More significant to Japanese equities is the increasingly vitriolic rhetoric we are seeing between Japan and China,'' said Kirby Daley, a strategist at Societe Generale Securities' Fimat unit in Tokyo. The Japanese government ``seems to be happy fanning the tension. To what end, I am not sure.''

Companies that rely on overseas sales dropped on concern a slowdown in consumer spending in the U.S., the world's largest economy, will cut sales and reduce profit growth.

Sony, the maker of the PSP portable game console and Cyber- shot digital camera, fell 60 yen, or 1.4 percent, to 4,150. The world's second-biggest consumer electronics maker got about 70 percent of its sales from abroad in 2003.

Honda, Japan's third-ranked carmaker, lost 50 yen, or 0.9 percent, to 5,440. The company had more than 75 percent of its sales in North America last year.

`Big Disappointment'

U.S. retail sales rose a less than forecast 0.3 percent in March, the Commerce Department said, as higher gasoline prices crimped consumers' willingness to spend. Sales were forecast to rise 0.8 percent, based on a Bloomberg News survey.

The average price of all grades of gasoline at the pump rose to $2.12 a gallon in March, compared with $1.95 a gallon the previous month, according to figures from the Energy Department. The price continued to rise this month, reaching a record $2.32 a gallon in the week ended April 11.

``The U.S. retail sales report was a big disappointment because it clearly reflected what sort of impact higher energy costs can have on U.S. demand,'' said Tatsuro Yuzawa, who helps manage $1.9 billion at Credit Suisse Trust & Banking Co.'s investment arm in Tokyo.

Tokyo Electron, the world's second-largest maker of chip- production equipment, fell 50 yen, or 0.8 percent, to 6,060.

Nikon, the world's largest maker of machines that etch circuitry onto silicon wafers, lost 45 yen, or 3.7 percent, to 1,187. Advantest Corp., the world's top maker of equipment used to test memory chips, fell 170 yen, or 2 percent, to 8,150.

Sales Slowdown

ASML, Europe's biggest maker of equipment used in semiconductor production, said orders this quarter will be lower than the previous three months.

Meanwhile, sales of chipmaking production equipment fell 2.5 percent in February from a year earlier, as spending by chipmakers slowed, figures from both the Semiconductor Equipment Association of Japan and Semiconductor Equipment & Materials International showed. The last time sales fell was in July 2003.

South Korea's Samsung Electronics Co., the world's second- largest maker of semiconductors, may report tomorrow the biggest quarterly profit decline in seven quarters.

Oil-related shares including Inpex Corp. and AOC Holdings Inc. had the biggest declines after crude prices fell to a seven- week low. Crude oil futures fell 3.2 percent to $50.22 a barrel in New York, the lowest close since Feb. 18. Futures have dropped 14 percent since reaching a record $58.28 on April 4.

Inpex, Japan's largest oil explorer, slid 10,000 yen, or 1.7 percent, to 587,000. Its smaller competitor, AOC, dropped 69 yen, or 4.4 percent, to 1,484.

Retailers

Retailers fell after Mitsukoshi Ltd., Japan's fifth-largest department store operator, yesterday cut its two-year sales and profit forecasts because of a decline in consumer spending.

Mitsukoshi lost 13 yen, or 2.5 percent, to 514. At its earnings announcement yesterday, the company lowered its forecast for operating profit 28 percent for the year ending February 2007. Mitsukoshi cut its sales forecast 6 percent for that year.

Takashimaya Co. fell 29 yen, or 2.9 percent, to 987, bringing its slide this week to 8.8 percent. Japan's largest department store operator earlier this week predicted profit and sales will drop in the first half.

Isetan Co., the fourth-largest department store operator, fell 20 yen, or 1.5 percent, to 1,308.

Advantest Corp. (6857 JT)
AOC Holdings Inc. (5017 JT)
Honda Motor Co. (7267 JT)
Inpex Corp. (1604 JT)
Isetan Co. (8238 JT)
Mitsukoshi Ltd. (2779 JT)
Nikon Corp. (7731 JT)
Sony Corp. (6758 JT)
Takashimaya Co. (8233 JT)
Tokyo Electron Ltd. (8035 JT)

To contact the reporter for this story: Michael Tsang in Tokyo at mtsang1@bloomberg.net.

Last Updated: April 14, 2005 02:33 EDT