Oct. 17 (Bloomberg) -- Japanese stocks fell, driving the Nikkei 225 Stock Average down for a fourth day, the longest losing streak in more than three months.

Banks led the drop after Prime Minister Junichiro Koizumi visited Yasukuni Shrine, which includes memorials to convicted war criminals, drawing criticism from neighboring countries including China and South Korea.

``It's fair to say that Prime Minister Koizumi's Yasukuni visit gave some people the excuse to sell,'' said Naoki Fujiwara, a chief fund manager who manages about $176 million in Japanese equities at Shinkin Asset Management Co. in Tokyo. ``You can't ignore the potential impact of being on bad terms with countries like China.''

The Nikkei fell 20.25, or 0.2 percent, to 13,400.29 at the 3 p.m. close in Tokyo, after gaining as much as 0.7 percent. The average's four-day drop matched the streak ended July 8. The Topix index slipped 4.51, or 0.3 percent, 1393.42. It earlier rose as much as 0.6 percent.

Both the Nikkei and the broader Topix index reversed earlier gains prompted by better-than-expected reports on U.S. retail sales and consumer prices that sent exporters such as Honda Motor Co. higher. The decline began in the afternoon, coinciding with the statement issued by the South Korean foreign minister on Koizumi's visit.

`Stumbling Block'

Banks, steelmakers and mining companies that were the three best performers in the previous quarter led the drop as comments from officials in countries neighboring Japan raised concern that political jitters will deter Koizumi from focusing on policies to support growth in the world's second-largest economy.

``The shrine visits are the biggest stumbling block in Korea- Japan ties,'' said South Korean foreign minister Ban Ki Moon after meeting with Japan's ambassador in Seoul. Ban called Yasukuni ``a symbol of colonial Japan, a time which caused Korea and other Asian nations indescribable pain.''

Wang Yi, China's ambassador to Japan, called the trip a provocation and said his government opposes such visits, Xinhua News Agency reported. Japan's embassy in Beijing issued a warning to Japanese nationals in China that Koizumi's visit to the Tokyo shrine may provoke ``strong reactions'' from the Chinese public, Kyodo News reported.

Mitsubishi UFJ, the world's largest lender by assets, dropped 60,000 yen, or 4.2 percent, to 1.38 million. Nippon Steel Corp., Japan's biggest steelmaker, declined 11 yen, or 2.7 percent, to 392. Inpex Corp., Japan's largest oil explorer, lost 19,000 yen, or 2.4 percent, to 788,000.

China's surging economy has helped drive demand for raw materials including steel and crude oil, and the nation is, combined with Hong Kong, Japan's biggest trading partner.

Koizumi's Visit

``Koizumi's visit to Yasukuni has raised concerns about some opposition from the neighboring countries and that has contributed to the declines today,'' said Teruhisa Ishikawa, a manager at Mizuho Investors Securities Co. in Tokyo.

Nikkei 225 futures for December delivery sank 0.5 percent to 13,350 in Osaka and dropped 0.3 percent to 13,355 in Singapore.

Trading fell below 2 trillion yen ($18 billion) for the first time since Sept. 15. About 1.95 trillion yen in shares included in the Topix traded, inline with the daily average for the past three months. Nine shares fell for every seven that gained on the Tokyo Stock Exchange's first section.

Investors may refrain from taking large bets before industry leaders including Intel Corp. and International Business Machines Corp. report earnings later this week, according to Kenichi Hirano, general manager, at Tachibana Securities Co. in Tokyo.

Intel, the world's biggest chipmaker, is scheduled to report earnings Oct. 18., while IBM, the world's largest maker of computer servers is expected to announce results later today.

`Reassuring Signs'

Honda, which is the most dependent on U.S. sales among Japan's top three carmakers, jumped 200 yen, or 3.1 percent, to 6,760. Toyota Motor Corp., Japan's largest automaker, climbed 60 yen, or 1.2 percent, to 5,170.

Mitsubishi Motors corp., Japan's fifth-largest automaker, rose 5 yen, or 2.2 percent, to 238. The carmaker will start supplying fuel-efficient gasoline engines to DaimlerChrysler AG for its Smart compact cars as early as next year, the Nihon Keizai reported.

A U.S. Labor Department report showed core consumer prices, excluding food and energy costs, rose 0.1 percent, less than the 0.2 percent increase economists surveyed by Bloomberg News had expected. Separately excluding autos, retail sales rose 1.1 percent last month, topping the median economists' estimate of 0.8 percent. The reports helped drive U.S. shares higher, with the Standard & Poor's 500 Index adding 0.8 percent.

``The U.S. is starting to show some reassuring signs that growth remains intact, and that's one element of comfort for investors to keep buying Japan,'' said Koichi Seki, an equity manager at Chuo Securities Co. in Tokyo.

Earnings Watch

Earnings announcements and revisions will be the biggest focus this week, according to Norihiro Fujito, a senior strategist at Mitsubishi UFJ Securities Co. in Tokyo.

Uniden Corp., a maker of cordless phones, jumped 143 yen, or 7.9 percent, to 1,949, the biggest gainer on the Morgan Stanley Capital International World Index after the company raised its half-year profit forecast, citing sales growth.

Nitto Denko Corp., a maker of chemical products used in electronic components such as semiconductors, jumped 210 yen, or 3.3 percent, to 6,580. After the close of the market on Oct. 14, the company said group net income for the six months ended Sept. 30 totaled about 26.2 billion yen, beating its 22.5 billion yen forecast, helped by increased output. It also raised its planned first-half dividend to 30 yen from 25 yen.

Victor Plunges

In contrast, Victor Co. of Japan Ltd., a maker of audio- visual products, slid 66 yen, or 9.4 percent, to 633. The company on Oct. 14 said its loss widened almost fourfold to about 16.5 billion yen in the six months ended Sept. 30 on costs to eliminate jobs and falling sales of DVD recorders and other consumer electronics.

In July, the firm forecast a 4 billion yen loss. Victor reversed its full-year forecast to an 11.5 billion yen loss.

The Topix Warehousing & Harbor Transportation Services Index jumped 7.2 percent, making it the best performer. Naoko Matsumoto, a Tokyo-based analyst at Nikko Citigroup Ltd. in Tokyo raised her estimate price on the nation's top three warehouse companies.

Mitsubishi Logistics Corp., the nation's largest, advanced 58 yen, or 3.9 percent, to 1,533. Sumitomo Warehouse Co., the second largest, jumped 81 yen, or 10 percent, to 858. Mitsui-Soko Co., the third largest, surged 71 yen, or 14 percent, to 585.

For Mitsubishi Logistic, Matsumoto expects the stock to reach as high as 1,980 yen in the next 12 to 18 month, while for Mitsui- Soko and Sumitomo Warehouse, she expects a share price of 760 yen and 930 yen respectively.

Honda Motor Co. (7267 JT)
Inpex Corp. (1604 JT)
Mitsubishi Logistics Corp. (9301 JT)
Mitsubishi Motors Corp. (7211 JT)
Mitsubishi UFJ Financial Group Inc. (8306 JT)
Mitsui-Soko Co. (9302 JT)
Nippon Steel Corp. (5401 JT)
Nitto Denko Corp. (6988 JT)
Sumitomo Warehouse Co. (9303 JT)
Toyota Motor Corp. (7203 JT)
Uniden Corp. (6815 JT)
Victor Co. of Japan Ltd. (6792 JT)

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

Last Updated: October 17, 2005 02:35 EDT