Japan Stock Futures Fall as Fitch Warns of Downgrades

(Corrects the direction of the S&P 500 Index’s move in the fifth paragraph)

Japanese stock (MXAP) futures fell after Fitch Ratings warned it may cut the credit ratings of European nations, diminishing optimism that policy makers will solve the region’s debt crisis. Australian equities dropped.

American depositary receipts of Canon Inc. (7751), the world’s biggest camera maker whose largest market is Europe, dropped 0.9 percent from the closing share price in Tokyo. Those of Mizuho Financial Group Inc., Japan’s No. 3 bank by market value, lost 2 percent. Billabong International Ltd. slumped 27 percent in Sydney after the Australian maker of surfwear cut the outlook for its sales.

Futures (TPX) on Japan’s Nikkei 225 Stock Average (NKY) expiring in March closed at 8,355 in Chicago on Dec. 16, down from 8,400 in Osaka, Japan. They were bid in the pre-market at 8,360 in Osaka, at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index fell 1.1 percent today. New Zealand’s NZX 50 Index added 0.2 percent in Wellington.

“Europe’s situation continues to be tough,” said Kenichi Hirano, general manager and strategist at Tachibana Securities Co. in Tokyo. “We are likely to see more downgrades for government debt and banks. Stocks will take a hit every time that happens.”

Futures on the Standard & Poor’s 500 Index (SPXL1) rose 0.1 percent today. The index rose 0.3 percent in New York on Dec. 16 as gains by commodity producers overshadowed concerns about the European debt crisis. Fitch Ratings put credit ratings for France, Belgium, Spain, Slovenia, Italy, Ireland and Cyprus under review for a downgrade, saying a “comprehensive” solution to Europe’s crisis is “technically and politically beyond reach.”

Finance Heads Meet

Finance ministers in the euro region will hold a conference call at 3:30 p.m. Brussels time today to meet a self-imposed deadline to channel additional bailout funds and put together new budget rules to stem the debt crisis and buoy investor confidence.

Losses in equities may be limited today after the U.S. Congress yesterday passed a $1 trillion spending bill to avert a government shutdown.

The MSCI Asia Pacific Index lost 18 percent this year through last week, compared with a 3 percent drop by the S&P 500 and a 15 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.5 times estimated earnings on average, compared with 12.3 times for the S&P 500 and 10.2 times for the Stoxx 600.

Chinese stocks trading in the U.S. posted the biggest weekly drop in three months as Baidu Inc. and Yanzhou Coal Mining Co. declined on concern the economic slowdown in the world’s second-largest economy is worsening.

The Bloomberg China-US 55 Index of the most-traded Chinese stocks lost 5.1 percent last week to 94.19 on Dec. 16, the biggest five-day slump since September.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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

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