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Japan Stocks Fall Amid 10-Month Low in Volume on Europe Concern

Japanese stocks dropped amid the lowest trading volume since December as Germany damped expectations for a fast resolution to Europe’s sovereign-debt crisis and China’s economy grew at the slowest pace in two years.

Mitsubishi UFJ Financial Group Inc. (8306), Japan’s largest lender by market value, dropped 1.8 percent. Canon Inc. (7751), the world’s biggest camera maker, slipped 1.7 percent. Olympus Corp., which has lost $3.8 billion in market value in the three trading sessions after ousting its president, fell 8.9 percent.

The Nikkei 225 (NKY) Stock Average dropped 1.6 percent to 8,741.91 at the 3 p.m. close in Tokyo, its steepest decline in two weeks. The broader Topix index fell 1.4 percent to 751.24 after a spokesman for German Chancellor Angela Merkel said Europe won’t provide a quick fix to the debt crisis.

“The negotiations on haircuts for holders of Greek bonds and the recapitalization of the banks isn’t going to be straight forward,” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co. “Right now, whatever happens in Europe determines what happens in the market.”

The Topix tumbled 16 percent this year amid concern the U.S. would fall into another recession while Europe’s crisis threatens to spread to the banking system. The slide has cut the price of shares on the index to 0.9 times estimated book value, near the lowest since March 2009. The value of shares changing hands on the first section of the Tokyo Stock Exchange fell to 1.17 trillion yen ($15.2 billion), the lowest since Dec. 28.

‘Dreams’

Futures on the Standard & Poor’s 500 Index lost 0.1 percent today. The gauge fell 1.9 percent in New York yesterday after Germany said European Union leaders won’t provide a complete fix to the euro-area debt crisis. The S&P 500 rose 6 percent last week amid optimism over corporate earnings and steps by European leaders to support the region’s banks.

Germany’s Merkel has made it clear that “dreams that are taking hold again now that with this package everything will be solved and everything will be over on Monday won’t be able to be fulfilled,” spokesman Steffen Seibert told reporters in Berlin. The search for an end to the crisis “surely extends well into next year.”

Mitsubishi UFJ dropped 1.8 percent to 335 yen. Sumitomo Mitsui Financial Group Inc. (8316), Japan’s second-largest lender by market value, declined 1.7 percent to 2,152 yen.

Stocks also dropped today after a report showed China’s economy grew 9.1 percent in the third quarter from a year earlier, the slowest pace since 2009, as the central bank tightened monetary policy and export demand weakened.

Consumer-Electronics Makers

Toyota Motor Corp. (7203), Asia’s biggest carmaker, declined 1.9 percent to 2,579 yen. Nissan Motor Co., Japan’s No. 3 automaker by market value, fell 1.7 percent to 716 yen. Canon fell 1.7 percent to 3,410 yen.

Consumer-electronics makers declined after Goldman Sachs Group Inc. cut ratings and price targets on concern a strong yen and falling prices for televisions will hurt earnings in the sector.

Sony Corp. (6758), the maker of PlayStation game consoles and Bravia Televisions, fell 1.2 percent to 1,588 yen after Goldman lowered its share-price forecast by 25 percent. Panasonic Corp. declined 2.6 percent to 743 yen after the brokerage cut its price target by 24 percent.

Olympus Corp. dropped 8.9 percent to 1,417 yen. Ousted President Michael C. Woodford said he asked U.K. prosecutors to investigate $687 million the company paid advisers in a 2008 acquisition. Chairman Tsuyoshi Kikukawa said the optical- equipment maker paid the “appropriate” amount, the Nikkei reported, citing an interview.

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Masaaki Iwamoto in Tokyo at miwamoto4@bloomberg.net.

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

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