Japanese Stocks Decline Third Day as U.S. Economic Growth Misses Forecast

Japanese stocks fell for a third day, the biggest drop in two weeks, after the U.S. economy expanded less than forecast, dimming the earnings outlook for Asian exporters of cars and electronics.

Sony Corp. (6758), which depends on the U.S. for a fifth of its sales, fell 1.8 percent after the yen gained against the dollar. Nippon Electric Glass Co. tumbled 10 percent after saying profit may fall by more than half. Mitsubishi Electric Corp. (6503) dropped the most on the Nikkei 225 Stock Average after the government barred it from state contracts.

“The U.S. GDP wasn’t very strong and the yen strengthened against the dollar, so the market should weaken a little,” said Kiyoshi Ishigane a Tokyo-based strategist at Mitsubishi UFJ Asset Management Co. which oversees about $84 billion. “Stocks have been rising since the middle of this month and now investors may want to sell to lock in profit.”

The Nikkei 225 fell 0.5 percent to 8,793.05 at the 3 p.m. close in Tokyo, the biggest drop since Jan. 16. The broader Topix (MXAP) Index lost 0.5 percent to 757.01. The 25-day Toraku (TORAKU) index, a technical indicator of market momentum, exceeded 120 for a third day, suggesting the market may be poised to fall.

The Topix has advanced 3.9 percent this year, rebounding from last year’s 19 percent drop, amid signs the U.S. economy is improving. Shares on the index trade for an average of 0.9 times book value, compared with 2.2 times for the Standard & Poor’s 500 Index. A number less than one means that companies can be bought for less than value of their assets

U.S. GDP

Futures on the S&P 500 Index slipped 0.5 percent today. The gauge lost 0.2 percent in New York on Jan. 27 after a report showed U.S. gross domestic product, the value of all goods and services produced, expanded less than analysts forecast.

The world’s biggest economy grew at a 2.8 percent annualized rate in the three months through December, compared with a forecast for a 3 percent increase.

More than a third of the Topix’s 1,660’s companies are scheduled to report earnings this week. Of the 296 that have posted net income for the latest quarter so far this year, 38 have exceeded analysts’ estimates, while 40 have fallen short, according to data compiled by Bloomberg.

Exporters declined after the dollar fell to as low as 76.65 yen today in Tokyo, compared with 77.05 at the close of stock trading on Jan. 27. Sony lost 1.8 percent to 1,388 yen. Toyota Motor Corp. (7203), a carmaker that gets almost 30 percent of its sales from the U.S., lost 1.7 percent to 2,789 yen.

Greek Debt Deal

European Union leaders gather today in Brussels for their first summit of 2012 where they will put the finishing touches on a German-led deficit-control treaty and endorse a 500 billion-euro ($661 billion) rescue fund to be set up this year.

Greece and its private creditors said Jan. 28 they expect to complete a deal in coming days after bondholders signaled they would accept European government demands for a bigger cut in their debt holdings.

Glass makers fell the most among the Topix’s 33 industry groups. Nippon Electric Glass tumbled 10 percent to 670 yen after saying profit may fall by at least 54 percent to 31.5 billion yen ($410 million) for this fiscal year on slumping demand for glass used in TVs and cameras. Asahi Glass Co. sank 3.4 percent to 627 yen.

Mitsubishi Electric plunged 15 percent to 650 yen after Japan barred it from bidding on projects until it refunds the government for overcharges. The company, which makes satellites equipment and electronics, last week said it billed the government too much on aerospace and defense contracts.

Shipping companies also declined after the Nikkei newspaper reported Japan’s three largest lines may post pretax losses for the year ending March amid plunging cargo rates. Nippon Yusen K.K., the country’s biggest shipper, slipped 2.1 percent to 191 yen. Mitsui O.S.K. Lines Ltd. lost 2.1 percent to 285 yen.

Advantest Corp. (6857) advanced the most on the Nikkei 225 (NKY) after saying it plans to raise its full-year dividend to 15 yen per share from 10 yen a year earlier. The world’s biggest maker of memory-chip testers also got a boost after JPMorgan Chase & Co. lifted its target price to 700 yen from 650 yen. Advantest soared 12 percent to 817 yen.

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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