Japanese Stocks Decline as Turnover at Lowest This Year on Europe Concerns

Japan’s Nikkei 225 Stock Average fell for the first time in three days as Italian borrowing costs surged, reigniting concern Europe’s debt crisis is spreading and damping the earnings outlook for Asian exporters. Turnover on the Tokyo Stock Exchange was the lowest this year.

Nintendo Co., a game maker that gets more than 40 percent of sales in Europe, sank 2.5 percent. Elpida Memory Inc. (6665), Japan’s biggest maker of computer memory chips, sank 9.1 percent amid low prices for memory devices. Sumitomo Mitsui Financial Group Inc. (8316), the country’s second-biggest bank by market value, gained 1.4 percent after raising its profit forecast. Olympus Corp. (7733) surged by its daily limit for a second day after a report the scandal-hit company may avoid delisting.

The Nikkei 225 (NKY) declined 0.7 percent to 8,541.93 at the close in Tokyo. The broader Topix index retreated 0.7 percent to 730.91, with about two stocks falling for each that advanced.

The value traded on the first section of the Tokyo Stock Exchange was 729 billion yen, ($9.46 billion), the lowest level since Dec. 28. The number of shares traded was the second- lowest this year.

“Investor concern hasn’t been eased,” said Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which oversees about $120 billion. “Europe’s debt crisis is starting to calm down overall, but it won’t be solved anytime soon.”

The Topix index sank 19 percent this year amid concern Japan’s export-led recovery would be hampered by the March 11 earthquake and tsunami, floods in Thailand and Europe’s debt crisis. The decline has cut the price of shares on the index to 0.9 times estimated book value, compared with 1.08 times at the start of the year.

Surging European Yields

Futures on the Standard & Poor’s 500 Index slid 0.4 percent today. The U.S. benchmark index lost 1 percent yesterday in New York after the yield on Italian five-year debt surged and yields on Spanish 10-year bonds hit a euro-era record relative to German bonds.

“People are now worried whether Spain will be the next Italy, and whether the Euro members will support indebted countries until the end,” said Daiwa Asset’s Nagano.

Stocks also fell after German Finance Minister Wolfgang Schaeuble said Europe’s permanent bailout fund may not be implemented before 2013. German Chancellor Angela Merkel’s Christian Democratic Union party voted to offer euro states a “voluntary” means of leaving the currency bloc.

Nintendo slid 2.5 percent to 12,070 yen. Nissan Motor Co., which depends on Europe for 15 percent of its sales, retreated 1.1 percent to 711 yen.

Inpex Corp. (1605), Japan’s top energy explorer by market value, slid 2.5 percent to 497,500 yen, and Japan Petroleum Exploration Co. declined 2.9 percent to 2,982 yen after crude oil for December delivery dropped 85 cents yesterday on the New York Mercantile Exchange.

Nisshin Steel Co. and Nippon Metal Industry Co. sank after denying media reports they are considering merging operations next year. Nisshin Steel dropped 6.9 percent to 108 yen, the biggest decline on the Nikkei. Nippon Metal tumbled 6.4 percent to 73 yen.

Elpida tumbled 9.1 percent to 330 yen as computer-storage prices sank. Price of the benchmark DDR3 2-gigabit DRAM was unchanged at 72 cents today. Memory-chip prices fell more than 25 percent during the third-quarter.

“DRAM prices are falling apart, weighing on Japan’s main DRAM maker whose sole products are memory chips,” said Tsutomu Yamada, a market analyst at Kabu.com Securities Co. in Tokyo “The more products they make, the more they’re going to be in the red.”

Elpida has fallen 65 percent this year, the fifth-worst performance in the Topix index. Tokyo Electric Power Co., whose power plant is the site of the worst nuclear crisis in 25 years, has fallen the most, shedding 85 percent and Olympus, whose management admitted to hiding losses using inflated expenses, is second, having lost 74 percent.

Sumitomo Mitsui Financial Group rose 1.4 percent to 2,094 yen after raising its full-year profit forecast by 25 percent to 500 billion yen ($6.5 billion) as lower costs from bad loans help compensate for a drop in lending income.

Olympus surged 19 percent to 640 yen, after soaring by its daily limit yesterday following a Reuters report that the company may retain its listing because Japan’s securities regulator may recommend it pay a levy for making false financial statements. The report cited an unidentified source familiar with the case.

To contact the reporter on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net.

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

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