Japanese Stocks Fall on Concern Yen Will Resume Strengthening; Honda Drops

Japanese stocks declined, sending the Nikkei 225 Stock Average lower for a second day, on concern the yen will resume strengthening and hurt exporters’ earnings.

Honda Motor Co., a carmaker that gets about 80 percent of its sales abroad, sank 1.9 percent. Sony Corp., an electronics maker that earns about 40 percent of its revenue from the U.S. and Europe, sank 1.2 percent. Mitsubishi Corp., Japan’s biggest commodities trader, rose 0.4 percent after oil and metal prices advanced.

“People in the market are worried the stronger yen will hurt exporters’ earnings,” said Naoteru Teraoka, general manager at Tokyo-based Chuo Mitsui Asset Management Co., which oversees about $26 billion. “The market has entered into a small correction.”

The Nikkei 225 Stock Average fell 0.3 percent to 10,141.10 as of the close in Tokyo. The broader Topix lost 0.3 percent to 879.10, even with three shares rising for every two that fell.

The Topix has tumbled 12 percent from its high this year on April 15 through yesterday as Europe’s debt crisis, China’s steps to curb property prices and concern about U.S. economic growth damped confidence in a global recovery. Stocks in the index trade at 15.2 times estimated earnings on average, compared with 14.4 times for the Standard & Poor’s 500 Index and 12.1 times for the Stoxx Europe 600 Index.

The Standard & Poor’s 500 Index fell 0.1 percent yesterday, snapping a three-day rally, after Federal Reserve Chairman Ben S. Bernanke said the world’s largest economy may need more stimulus.

Automakers Drag

Honda declined 1.9 percent to 3,075 yen, the heaviest drag on both the Topix and Nikkei 225. Toyota Motor Corp., the world’s biggest carmaker, slid 0.6 percent to 3,255 yen. Automakers were the biggest contributor to the Topix’s decline among its 33 industry groups, followed by electronics makers.

Sony sank 1.2 percent to 2,984 yen. Canon, which earns about 80 percent of its sales outside of Japan, slid 0.4 percent to 4,055 yen.

“The yen is strengthening because it’s just relatively no worse than other currencies,” said Teraoka. “The U.S. recovery is still uncertain and Europe has various financial issues.”

The yen appreciated to as high as 82.34 against the dollar today in Tokyo, compared with 82.86 at the close of stock trading yesterday. Against the euro, Japan’s currency strengthened to as much as 109.57 from 110.60. A stronger yen reduces overseas income at Japanese companies when converted into their home currency.

“Concerns about the strong yen may weaken exporters,” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co.

Commodities Advance

Mitsubishi rose 0.4 percent to 2,173 yen. Sumitomo Corp., Japan’s third-largest trading company, advanced 0.3 percent to 1,174 yen. Japan Petroleum Exploration Co., the nation’s second- largest oil explorer, climbed 1 percent to 2,982 yen.

Crude oil for January delivery rose 0.2 percent to settle at $89.38 a barrel in New York yesterday on speculation the U.S. may extend stimulus measures, bolstering fuel demand in the world’s largest oil-consuming country, and on cold-weather forecasts for the U.S. and Europe.

Crude had its longest advance in four weeks after Federal Reserve Chairman Ben S. Bernanke said the Fed may expand bond purchases beyond the $600 billion announced last month. Winter weather in parts of the U.S. and Europe boosted demand for heating fuel. Copper futures for delivery in March rose 0.2 percent in New York yesterday, after reaching the highest for a most-active contract since Nov. 12.

-- With assistance from Satoshi Kawano. Editor: Nick Gentle, Sam Waite.

To contact the reporters for this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.