Japanese Stocks Fall as Yen Strengthens; Shippers, Machinery Makers Drop

Japanese stocks declined for a second day after the yen strengthened and a shift in China’s growth strategy away from investment and exports weighed on shipping companies and machinery makers.

Canon Inc., a camera maker that gets about 80 percent of its sales overseas, slumped 1.3 percent. Nippon Yusen K.K. (9101), Japan’s top shipping line by sales, lost 2.5 percent. Fanuc Corp., which makes robotics for mainland factories run by companies such as Hon Hai Precision Industry Co., declined 2.5 percent.

“Stock markets are following currency movements because there are no big catalysts to be found,” said Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which oversees about $104 billion. “I don’t think the cut in China’s target is bothering people in the market, but it’s relatively negative for stocks related to public infrastructure as the nation is shifting away from investment toward consumption.”

The Nikkei 225 Stock Average (NKY) fell 0.6 percent to 9,637.63 at the 3 p.m. close in Tokyo. The broader Topix Index lost 0.7 percent to 827.35, with trading volume 5.4 percent higher than the 30-day average.

Futures on the Standard & Poor’s 500 Index (SPXL1) fell 0.3 percent today. The gauge fell 0.4 percent in New York yesterday after U.S. factory orders cooled in January.

Exporters Retreat

Exporters slumped after the Japanese currency rose. Canon, the world’s biggest camera maker, slumped 1.3 percent to 3,675 yen. Nissan Motor Co. (7201), a carmaker that gets about 80 percent of its revenue overseas, lost 1.4 percent to 799 yen.

The yen strengthened as high as 81.34 against the dollar in Tokyo, compared with 81.53 when the stock market opened today. Japan’s currency also appreciated against the euro, climbing to 107.33 from 107.82. A stronger yen cuts overseas income at Japanese companies when repatriated.

Shippers and infrastructure-related stocks fell after the Chinese government pared the nation’s economic growth target to 7.5 percent from an 8 percent goal in place since 2005, a signal that leaders aim to cut reliance on investment and exports in favor of domestic consumption.

Shippers, Machinery Makers

Shippers, steelmakers and machinery makers were the biggest decliners in the Topix’s 33 industry groups. Nippon Yusen lost 2.5 percent to 233 yen, while Mitsui O.S.K. Lines Ltd., which gets almost 30 percent of its sales in Asia, slid 2.8 percent to 352 yen.

Fanuc (6954) fell 2.5 percent to 14,330 yen. Hitachi Construction Machinery Co., an excavator maker that gets more than half of its sales in Asia, slumped 2.8 percent to 1,659 yen. JFE Holdings Inc., a steel producer that gets almost 30 percent of its sales in Asia outside Japan, fell 3.1 percent to 1,592 yen.

The Topix has risen 14 percent this year on signs of U.S. economic recovery and European moves to contain the debt crisis. The gain has boosted the value of stocks listed on the Topix to 1.01 times book value, up from 0.88 in December, according to data compiled by Bloomberg. A number below 1 means companies can be bought for less than value of their assets.

To contact the reporters 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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