Japan Stocks Fall for Second Day on Nuclear Worries; Chubu Electric Slumps

Japanese stocks fell for a second day on concern that a government request to shut a nuclear reactor located close to an earthquake fault-line may hurt the economy.

Chubu Electric Power Co., based in Nagoya in central Japan, plunged 10 percent after Japanese Prime Minister Naoto Kan asked it to close its Hamaoka nuclear plant. Tohoku Electric Power Co. lost 2.1 percent after the Asahi newspaper reported it may post a loss. Toyota Motor Corp. (7203), the world’s largest carmaker, slid 0.5 percent. Yamaha Corp. (7951), a musical instruments maker, tumbled 5.8 percent after forecasting profit will drop, citing the March 11 quake impact.

The Nikkei 225 Stock Average fell 0.7 percent to 9,794.38 at the 3 p.m. close of trading in Tokyo. The broader Topix lost 0.4 percent to 853.21, with about twice as many shares declining as advancing.

“The call to shut Chubu Electric’s reactors is boosting uncertainty,” said Koichi Kurose, chief strategist in Tokyo at Resona Bank Ltd., which oversees the equivalent of $57 billion in assets. “If the reactors are halted, it will add to costs for most companies, especially automakers and other manufactures that need electricity to produce products.”

The Topix has declined 8.3 percent since March 10, the day before a magnitude-9 earthquake and tsunami devastated Japan’s northeast coast, disabled a nuclear power plant and disrupted supply chains at companies from Toyota to Canon Inc. In the period through the last close, the Standard & Poor’s 500 Index gained 3.5 percent and the Stoxx Europe 600 Index rose 1.2 percent.

Utilities Drop

Kan on May 6 asked Japan’s third-biggest utility to shut its Hamaoka power plant, citing a government study that showed an 87 percent likelihood of a magnitude-8 quake striking the area within 30 years. It is the first government request to close reactors since the March 11 temblor caused the world’s worst nuclear accident in 25 years.

Chubu Electric plunged 10 percent to 1,584 yen, the lowest close since April 2000 and the biggest drop in the Nikkei 225. Power and gas companies had the steepest fall in the Topix among its 33 industry groups.

Tohoku Electric, a utility based in the northern Miyagi prefecture, lost 2.1 percent to 1,205 yen after the Asahi newspaper reported the utility, which had expected a 36 billion yen profit, may post a loss for the year ended March 31 after power plants were damaged in the March earthquake.

Carmakers Slipped

“A lot of industrial-use products such as cars and electronics parts are produced in the Chubu district,” said Kazuhiro Takahashi, a general manager at Daiwa Securities Capital Markets Co. in Tokyo. “The uncertainty about the government measures toward nuclear power is a negative factor for stock prices.”

Toyota, which operates 12 car and component factories in Aichi prefecture, central Japan, slid 0.5 percent to 3,195 yen and smaller automaker Nissan Motor Co. fell 1.3 percent to 767 yen. Carmakers were the heaviest drag on the Topix’s decline, following power and gas sectors.

European-oriented companies declined after the euro fell the most in four months against the dollar as European Central Bank President Jean-Claude Trichet signaled he may not raise interest rates next month and concern grew that Greece’s debt crisis is worsening.

Weaker Euro

“While concern remains about the European sovereign risks and the stronger yen, stock prices may face upside resistance,” said Hiroshi Miyazaki, chief economist at Shinkin Asset Management Co. in Tokyo.

Nippon Sheet Glass Co., a glassmaker that generates about 40 percent of its sales in Europe, slipped 0.8 percent to 242 yen. Nintendo Co., a video-game console maker that gets a third of its revenue from Europe, lost 1.6 percent to 19,430 yen, extending its decline of May 6 after cutting the price of its Wii console to $150.

The euro depreciated to as much as 114.99 yen today in Tokyo, compared with 117.18 at the close of stock trading on May 6. A weaker euro cuts the value of European income at Japanese companies when converted into their home currency.

Today, 91 of the 1,673 companies in the Topix index were scheduled to release earnings statements. Of the 517 companies that have reported results for the latest quarter, 102 have exceeded analysts’ estimates, while 100 have missed them, according to data compiled by Bloomberg.

Yamaha, Kirin

Yamaha tumbled 5.8 percent to 936 yen after forecasting a 24 percent decline in operating profit to 10 billion yen ($124 million) for this fiscal year, citing sluggish sales after difficulties in procuring electronic parts and a slump in consumer spending after the earthquake. Yamaha had the second- steepest fall in the Nikkei 225 (NKY), followed by Fast Retailing Co. and Kirin Holdings Co.

Fast Retailing, Asia’s biggest apparel chain, lost 4.2 percent to 12,310 yen after saying the number of customers at its Uniqlo stores open at least 12 months in Japan declined 1.2 percent last month, falling for a third month.

Kirin, the nation’s No. 2 brewer by volume, sank 4 percent to 1,094 yen after saying it took a charge of 5.1 billion yen from damage on its Sendai factory from the March 11 earthquake. The company booked a 2.11 billion yen net loss for the January- March period, compared with a profit of 6.16 billion yen a year earlier.

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

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

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