Japanese Stocks Decline as Europe Concern Flares; Olympus Gains

Japanese stocks (TPX) fell, driving down the Nikkei 225 Stock Average (NKY) the most in more than two weeks, on signs Europe’s debt crisis is worsening. Olympus Corp. (7733), the camera maker mired in an accounting scandal, rebounded.

Canon Inc. (7751), which depends on Europe for almost a third of its sales, lost 1.2 percent after the euro fell to an 11-year low against the yen. Elpida Memory Inc. sank 7.4 percent on a report the chipmaker, facing $1.6 billion in bond redemptions and loan payments, is seeking financial support from other companies. Olympus rallied 4.4 percent after Michael Woodford’s spokesman said the former chief executive is meeting investors to discuss forming a new board at the scandal-mired camera maker.

The Nikkei 225 Stock Average fell 0.8 percent to 8,488.71 at the 3 p.m. close in Tokyo, the steepest drop since Dec. 19. The broader Topix lost 0.9 percent to 736.28. Shares slipped after Prime Minister Lucas Papademos said Greece is at “risk of a disorderly default” and UniCredit SpA (UCG), Italy’s biggest bank, yesterday said it will sell shares at a discount to plug a capital shortfall.

“It reminds investors that there isn’t an easy solution to Europe’s problems,” said Kiyoshi Ishigane, a senior strategist in Tokyo at Mitsubishi UFJ Asset Management Co. which oversees the equivalent of $84 billion. “Euro weakness is having impact on the market today.”

Futures on the Standard & Poor’s 500 Index (SPXL1) slid 0.2 percent today. The gauge closed little changed yesterday in New York, shrugging off negative news from Europe amid signs of recovery in the world’s largest economy.

U.S. Buoying Markets

The International Council of Shopping Centers yesterday said U.S. retail sales may have risen last month more than initially expected and Ford Motor Co. reported December sales that beat analysts’ estimates.

“The U.S. real economy is firmer than people thought,” said Ishigane at Mitsubishi UFJ Asset. “That’s buoying markets.”

An improving U.S. economy may drive an 18 percent gain in the benchmark Nikkei 225 to about 10,000 by the end of June, according to Shun Maruyama, a Tokyo-based strategist at BNP Paribas SA. A boost in demand as Japan rebuilds from the March 11 earthquake and tsunami will also lift stocks, Maruyama wrote in a report today.

Japanese shares slipped today after the euro fell to as low as 99.05 yen today in Tokyo, its weakest since December 2000. Europe’s shared currency slid as UniCredit’s share offer spurred concern the region’s banks may struggle to raise capital. The bank said it will sell shares at 43 percent less than yesterday’s closing price, excluding the value of rights.

‘Risking Disorderly Default’

Prime Minister Papademos yesterday asked Greeks to accept deeper pay cuts so that the country’s creditors will agree to provide more financing. Without an agreement, Greece “faces the immediate risk of a disorderly default,” he said according to an e-mailed transcript of statements to union and business leaders.

Japanese exporters of electronics that depend on European sales declined. Canon slid 1.2 percent to 3,390 yen. Sony Corp. (6758), which earns more than 20 percent of its revenue in Europe, lost 2.2 percent to 1,373 yen.

The following were among the most active shares in the Japanese market (NKY) today. Stock symbols are in parentheses after company names.

Silicon wafer makers: Sumco Corp. (3436) (3436 JT) retreated 2.9 percent to 564 yen, while Shin-Etsu Chemical Co. (4063) (4063 JT) fell 1.8 percent to 3,790 yen after website PVinsights.com said the price of poly-silicon jumped 4.5 percent from last week amid anti-dumping probes.

Steelmakers: JFE Holdings Inc. (5411) (5411 JT) paced declines among steelmaker after the Nikkei newspaper reported Toyota Motor Corp. (7203) asked steelmakers for a cut of about 5,000 yen a ton for the half-year ending in March. Steel prices will fall by the biggest margin since fiscal 2009 if Toyota gets its way, the report said. JFE fell 2.2 percent to 1,387 yen. Nippon Steel Corp. (5401) (5401 JT) lost 2.1 percent to 191 yen.

Elpida Memory Inc. (6665) (6665 JT) tumbled 7.4 percent to 350 yen. The money-losing chipmaker sought $500 million in support from 10 companies in the U.S., Taiwan and China, the Yomiuri newspaper reported without citing anyone. Elpida declined to comment in an email.

Olympus Corp. (7733 JT), the camera maker reeling from a $1.7 billion accounting fraud, rallied 4.4 percent to 1,031 yen after Woodford’s spokesman, Waku Miller, said the former CEO has returned to Japan to meet investors over a possible proxy fight.

Point Inc. (2685) (2685 JT), an apparel chain, slipped 3.5 percent to 3,150 yen. The retailer said domestic same-store sales fell 0.4 percent in December from a year earlier, driven by lower customer traffic.

Taiyo Yuden Co. (6976) (6976 JT): The maker of electronic components gained 2 percent to 605 yen after the Nikkei quoted company president Eiji Watanuki as saying the company aims to exceed 10 billion yen in operating profit in the year ending March 2013.

TonenGeneral Sekiyu K.K. (5012) (5012 JT) plummeted 7.2 percent to 735 yen, falling for a second day after Reuters yesterday reported that parent Exxon Mobile Corp. plans to sell most of its stake in the refiner. TonenGeneral plans to pay 200 billion yen to buy back more than 30 percent of its own shares from Exxon, which holds 50.02 percent, the Nikkei reported today.

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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