Japan Stocks Fall After U.S. Data Fails to Spur Buying

Japanese shares fell as U.S. consumer confidence near its strongest level in a year failed to spur buying after the Nikkei 225 (NKY) Stock Average gained the most in six months yesterday. Sharp Corp. jumped after Foxconn Technology Group agreed to buy a stake in the display maker.

Nippon Kayaku Co. slumped 3 percent after the chemical maker’s profit fell. Tokyu Corp. (9005), a rail and bus company, slid 1.4 percent after announcing an operating-profit target that missed Deutsche Bank AG’s estimate. Shares of Sharp surged by the daily limit in Tokyo, jumping 16 percent at the close.

The Nikkei 225 dropped 0.7 percent to 10,182.57 at the 3 p.m. close in Tokyo after yesterday gaining 2.4 percent, its biggest advance since Sept. 27. Trading volume on the gauge today was 16 percent below the 30-day average, according to data compiled by Bloomberg. The broader Topix Index slid 0.9 percent to 864.43 after the expiration of a deadline yesterday to buy shares and still get a dividend for about four-fifths of the companies on the gauge.

“There are concerns the market has risen too much,” said Naoteru Teraoka, general manager at Tokyo-based Chuo Mitsui Asset Management Co., which oversees about $27.6 billion. Investors are setting the bar higher for U.S. economic reports, he said.

Futures on the Standard & Poor’s 500 Index (SPXL1) were little changed today. The gauge dropped 0.3 percent in New York yesterday even as a key consumer confidence index held close to the highest level in a year, and a measure of property values in 20 cities fell at a slower pace in January.

‘Mixed Data’

“U.S. data overnight were mixed,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “We are in a consolidation phase after markets put on some pretty good gains, particularly in Japan.”

The Nikkei 225 yesterday erased losses since the country’s record earthquake on March 11 last year as the declining yen and $241 billion of reconstruction spending helped make it the best- performing benchmark index in the developed world this year. Shares in the gauge are valued at 1.3 times book value on average, compared with 2.3 times for the S&P 500 and 1.5 times for the Stoxx Europe 600 Index.

Nippon Kayaku slid 3 percent to 837 yen today after saying its operating profit for the nine months ended Feb. 29 fell 14 percent from a year earlier as sales slowed and research and development costs increased.

Tokyu Target

Tokyu fell 1.4 percent to 398 yen. The company targeted operating profit of 55 billion yen ($664 million) for the year ended March 31, 2014, short of a 71 billion yen estimate by Seigo Ando, a Tokyo-based analyst at Deutsche Bank.

Sharp rallied 16 percent to 570 yen after Foxconn Technology and founder Terry Gou agreed to invest 133 billion yen in the TV maker and its display unit. The deal is the largest Japanese investment by a Taiwanese buyer and includes an agreement for the Apple Inc. supplier to purchase as much as 50 percent of Sharp Display Products Corp.’s liquid-crystal-display panels.

The Nikkei 225 Volatility Index (VNKY) fell 2.8 percent to 19.68, indicating traders expect a swing of about 5.6 percent on the benchmark gauge over the next 30 days.

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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