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Japanese Stocks Fall on U.S. Factory Orders, Commodities

Japanese stocks declined for a second day after orders placed with U.S. factories for durable goods rose less than economists estimated. Oil and metals prices retreated, driving down traders of commodities.

Toyota Motor Corp. (7203), Asia’s biggest carmaker by market value, slumped 1.7 percent after the yen strengthened, damping the earnings outlook for exporters. Mitsui & Co. (8031), a trading house that counts commodities as its biggest source of revenue, fell 3.3 percent. Ebara Corp. dropped 4.2 percent after Yamato Holdings Co. filed a lawsuit seeking compensation involving the cleanup of land purchased from the hydraulic pump maker.

“U.S. data is pouring cold water on the rally,” said Naoki Fujiwara, who helps oversee $6 billion at Shinkin Asset Management Co. in Tokyo. “The market is in a correction phase amid worries it has risen too much.”

The Nikkei 225 Stock Average (NKY) dropped 0.7 percent to 10,114.79 at the 3 p.m. close in Tokyo, its biggest two-day drop since March 6. The gauge this week finished clawing back losses since the country’s record earthquake on March 11 last year, with the rebound driven by a 7 percent decline in the yen against the dollar, reconstruction efforts and an improving global economic outlook. The broader Topix Index slid 0.8 percent to 857.74 today, with volume 15 percent lower than the 30-day average.

Futures on the Standard & Poor’s 500 Index (SPXL1) slid 0.1 percent. The gauge lost 0.5 percent in New York yesterday after a report showed that factory bookings for goods meant to last at least three years advanced less than expected in February after a revised decline the month before.

Exporters also dropped after the yen touched 82.55 against the dollar today, strengthening from as low as 83.39 yesterday. The currency gained on speculation the nation’s companies will repatriate overseas earnings before the end of the fiscal year on March 31. A stronger yen damps the value of overseas income at Japanese companies.

Export Stocks Fall

Toyota fell 1.7 percent to 3,575 yen. Sony Corp. (6758), Japan’s biggest exporter of consumer electronics, lost 1.5 percent to 1,746 yen.

The correlation between the Nikkei 225 and the dollar-yen rate has risen to 0.89, the highest since February 2009, according to Bloomberg data. A value of one means the rate and the index are in lockstep.

Crude oil for May delivery slumped 1.8 percent yesterday in New York after the U.S. Energy Department said inventories climbed the most in 20 months. The London Metal Exchange Index of prices for six industrial commodities including copper and aluminum fell 1.8 percent yesterday.

Commodity Stocks Decline

Trading companies were among the biggest declines in the Topix’s 33 industry groups. Mitsui lost 3.3 percent to 1,354 yen. Mitsubishi Corp., Japan’s biggest commodity trader by sales, retreated 2.8 percent to 1,931 yen. Inpex Corp., the nation’s largest energy explorer by market value, dropped 1.6 percent to 563,000 yen.

“With all the good news being factored in, we are coming to a tougher period and markets are vulnerable to any bad news,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “We are starting to see data come out on the softer side of what’s expected.”

Sharp Extends Rally

Ebara slumped 4.2 percent to 298 yen, the steepest drop in the Nikkei 225. The company was sued for not cleaning up asbestos from a property it sold to Yamato Holdings, a parcel service that is seeking 7.4 billion yen ($90 million) in damages, according to a statement filed to the Singapore Stock Exchange.

Sharp Corp. jumped 6.7 percent to 608 yen, extending yesterday’s surge on Foxconn Technology Group’s plan to invest in the liquid-crystal-display manufacturer. The stock fell to a 30-year low earlier this month.

Shares on the Topix are valued at 1.05 times book value, up from 0.88 in December, according to data compiled by Bloomberg. A number less than one means companies can be bought for less than value of their assets.

The Nikkei 225 Volatility Index (VNKY) fell 0.4 percent to 19.61, 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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