Japanese Stocks Fluctuate as China Shares Decline, Tokyo Electron Advances

Japanese stocks fluctuated as China- related companies fell on concern the country’s economic growth will slow, while chip shares rose for a second day after Intel Corp. forecast sales that may exceed analyst estimates.

Komatsu Ltd., a machinery maker that receives 17 percent of its sales from China, sank 1 percent. Nippon Yusen K.K., Japan’s second-biggest operator of dry-bulk ships, dropped 1.1 percent. Tokyo Electron Ltd., the world’s No. 2 maker of semiconductor equipment, rose 3.4 percent. The Shanghai Composite Index in China, Japan’s top export destination, lost 2.6 percent after the central bank ordered lenders on Jan. 14 to boost reserves.

“There are concerns the increase in China’s reserve ratio will damage the economy and lead to a decline in capital investment,” said Tomomi Yamashita, a fund manager in Tokyo at Shinkin Asset Management Co., which oversees about $6 billion. The Intel forecast was helping to boost chip stocks, he said.

The Topix index fell 0.2 percent to 928.73 at the close of trading in Tokyo, with about eight stocks advancing for every seven that declined. The Nikkei 225 Stock Average climbed less than 0.1 percent to 10,502.86.

The Topix has risen 3.3 percent this year, driving the average price of shares in the index to 16 times estimated earnings on average, near the highest level since August.

The gauge sank 1 percent in 2010 as the yen at its strongest annual average level against the dollar since 1971 dimmed the outlook for export earnings, and as Europe’s debt crisis, China’s steps to curb inflation and concern about U.S. growth damped confidence in a global recovery.

Komatsu Declines

Komatsu, Asia’s largest maker of construction equipment, dropped 1 percent to 2,513 yen. Nippon Yusen, which counts Asia excluding Japan as its largest market by sales, lost 1.1 percent to 374 yen. Suzuki Motor Corp., a carmaker that gets 34 percent of its revenue from Asia ex Japan, lost 1.7 percent to 2,035 yen.

The Chinese central bank told lenders after markets closed on Jan. 14 to hold more deposits as reserves, lifting required ratios by 50 basis points. Shanghai is also preparing for a trial property tax in order to curb “speculative” investment.

“If there is a big correction in Chinese shares, Japan’s stock market may be affected too,” said Koichiro Nishio, a market analyst in Tokyo at Nikko Cordial Securities Inc.

Tokyo Electron rose 3.4 percent to 5,740 yen and was the biggest boost to the Nikkei 225. Advantest Corp., the world’s largest maker of machines used to test memory chips, climbed 1.4 percent to 1,849 yen. Dainippon Screen Manufacturing Co. gained 3.8 percent to 691 yen after JPMorgan Chase & Co. raised its share-price target to 1,000 yen from 790 yen. Sumco Corp., a maker of silicon wafers, jumped 5.3 percent to 1,316 yen, the steepest percentage increase in the Nikkei.

Elpida Advances

Elpida Memory Inc., the world’s third-largest maker of computer-memory chips, climbed 2.5 percent to 1,087 yen. Deutsche Bank AG boosted the stock’s investment rating to “hold” from “sell” and increased its share-price target to 1,000 yen from 750 yen.

Intel said Jan. 13 it expects sales growth of 10 percent this year from a record in 2010. If it delivers 2011 sales of $48 billion, as its forecast indicates, Intel would exceed the average of analyst estimates by about 6 percent. JPMorgan Chase & Co. reported record quarterly profit in New York on Jan. 14.

“Corporate earnings in the U.S. for the last quarter are showing improvements, which is leading to expectations of better earnings for Japanese companies,” said Masaru Hamasaki, who helps oversee about $17 billion in Tokyo as chief strategist at Toyota Asset Management Co.

Tiremakers dropped after the price of rubber advanced to a record for a fourth day. Bridgestone Corp., the world’s biggest tiremaker, fell 0.9 percent to 1,550 yen. UBS AG reduced its investment rating on the company to “neutral” from “buy.” Sumitomo Rubber Industries Ltd., Japan’s No. 2 tiremaker, and Yokohama Rubber Co., the country’s third-largest producer of rubber products, both fell 1.9 percent.

The June-delivery contract for rubber gained as much as 1.3 percent to 460.4 yen ($5.55) per kilogram (2.2 pounds) on the Tokyo Commodity Exchange. Rubber has gained as much as 11 percent this month, extending the 50 percent rally in 2010.

To contact the reporter on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net.

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

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