Japanese Stocks Decline for First Time in Three Days as Oil Price Advances

Japanese stocks fell, driving down benchmark indexes for the first time in three days, as surging oil prices threatened companies with higher energy costs.

All Nippon Airways Co., Asia’s biggest listed carrier by sales, and Honda Motor Co., Japan’s No. 2 carmaker by market value, both lost 2.4 percent. Tokyo Electric Power Co., the operator of a nuclear plant crippled after an earthquake and tsunami on March 11, dropped 3.7 percent as speculation grew the company will be nationalized. Inpex Corp. (1605), Japan’s largest oil explorer, advanced 4.3 percent.

The Nikkei 225 Stock Average declined 0.5 percent to 9,708.39 as of the close of trading in Tokyo, after swinging between gains and losses more than 10 times. The gauge closed at its highest level since March 11 yesterday and gained 1.8 percent this week, a second consecutive weekly advance. The broader Topix index sank 0.8 percent to 862.62 today, with more than four shares declining for each that advanced.

“Basically, any company with manufacturing bases in Japan will be negatively affected by higher oil prices,” said Tomomi Yamashita, a fund manager in Tokyo at Shinkin Asset Management Co., which oversees $6 billion. “We’ll likely see economic indicators that come out from here on that are quite bad, so on the whole, we probably won’t see the market being bought.”

Crude Oil Climbs

Pulp and paper makers retreated the most today as a group, followed by utilities and airlines. Oji Paper Co., Japan’s biggest maker of paper and forest products, dropped 3.8 percent to 380 yen. All Nippon Airways lost 2.4 percent to 242 yen. Bridgestone Corp. (5108), the world’s largest tiremarker by market value, declined 1.4 percent to 1,719 yen. Honda fell 2.4 percent to 3,050 yen.

Oil companies advanced the most among the 33 industry groups in the Topix. Inpex rose 4.3 percent to 658,000 yen. Japan Petroleum Exploration Co. (1662) increased 1 percent to 4,200 yen. JX Holdings Inc. (5020), Japan’s No. 1 refiner, gained 1.4 percent to 568 yen. Mitsubishi Corp. (8058), Japan’s biggest commodities trader, rose 0.7 percent to 2,324.

“There are more listed companies in Japan that feel the negative effects of higher oil prices since they cannot pass on costs, than companies that benefit,” said Takero Inaizumi, head of equity research in Tokyo at Mizuho Investors Securities Co.

Crude oil for May delivery rose 2.4 percent to $106.72 a barrel yesterday in New York, the highest settlement since Sept. 26, 2008, amid concern that the Libyan conflict will prolong production cuts.

Annual Decline

The Nikkei 225 (NKY) declined 12 percent in the Japanese fiscal year that finished yesterday, and dropped 4.6 percent last quarter. Among the Topix’s groups, utility companies including Tokyo Electric Power tumbled the most last year, followed by brokerages, while oil refiners led gains.

Tokyo Electric Power, known as Tepco, fell 3.7 percent to 449 yen today, paring a 14 percent drop intraday. The Japanese government will acquire a stake in the utility to influence management and ensure a steady electricity supply, the Mainichi newspaper reported, citing an unidentified government official. The stake won’t exceed 50 percent, the report said. Japan’s government hasn’t ruled out the possibility of investing in Tokyo Electric, Chief Cabinet Secretary Yukio Edano said.

Kansai Electric Power Co., Japan’s biggest utility by market value, fell 1.4 percent to 1,785 yen. Chubu Electric Power Co., the No. 2, dropped 2.9 percent to 1,796 yen.

Japan’s quarterly Tankan index of sentiment among big manufacturers climbed to 6 in March from 5 in December, the Bank of Japan said today, noting that 72 percent of responses came by the day of the quake. The bank on April 4 will release a breakdown of pre-quake and post-quake responses, offering a gauge of the magnitude of the hit to business confidence.

Other reports this week showed Japan’s industrial production unexpectedly climbed in February, the unemployment rate fell to 4.6 percent that month and retail sales rose 0.1 percent in from a year earlier.

The Tankan with post-quake responses “will likely show a big decline,” Shinkin Asset’s Yamashita said.

To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net.

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

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