Japan’s Topix Falls on Greek Risk, Machinery Order Drop

May 16 (Bloomberg) -- Japanese stocks fell, with the Topix Index declining a sixth day, as Greece moved to hold another election after failing to form a new government, intensifying concern the debt-stricken nation will exit the euro. Shares also declined on a report Japanese machinery orders slumped in March.

Konica Minolta Holdings Inc. (4902), a maker of photo films that gets 28 percent of its sales in Europe, lost 3.9 percent. Komatsu Ltd. (6301), Japan’s largest construction machinery maker, fell 2.5 percent. Nichii Gakkan (9792) Co., a provider of hospital administration services, slumped 12 percent after its operating profit forecast missed estimates.

The Nikkei 225 Stock Average (NKY) lost 1.1 percent to 8,801.17 at the 3 p.m. close in Tokyo. Trading volume was 14 percent below the 30-day average. The broader Topix fell 1.1 percent to 738.88, with about four shares dropping for each that rose.

Risk aversion is rising, making it hard for investors to make a move through June while monitoring Greek political developments,” said Hitoshi Asaoka, a Tokyo-based senior strategist at Mizuho Trust & Banking Co., a unit of Japan’s third-largest bank by market value. “Cyclical stocks sensitive to risk sentiment are leading losses.”

The Nikkei 225 has retreated 14 percent from this year’s high on March 27 as China’s economic growth slowed and on renewed concern about Europe’s debt crisis. The drop has brought the value of stocks on the Topix to 0.88 times book value, compared with 2.11 for the S&P 500 and 1.35 for the Stoxx Europe 600 Index. A value less than one means investors can buy companies for less than the value of their assets.

Greek Election

Futures on the Standard & Poor’s 500 Index (SPX) fell 0.4 percent today. The gauge slid 0.6 percent in New York yesterday as Greece announced it will return to the polls after President Karolos Papoulias failed to broker a governing coalition. Resistance to austerity measures has led to political gridlock that threatens 240 billion euros ($305 billion) of aid and an exit from the monetary union.

“If Greece -- and this is the will of the great majority - - wants to stay in the euro, then they have to accept the conditions,” German Finance Minister Wolfgang Schaeuble told reporters at a meeting of European finance ministers in Brussels. “Otherwise it isn’t possible. No responsible candidate can hide that from the electorate.”

Companies that rely on Europe fell. Konica Minolta slid 3.9 percent to 596 yen. Canon Inc. (7751), a camera maker that gets 31 percent of its sales in the region, slid 1 percent to 3,375 yen.

Industrial shares also dropped on a government report today that showed Japan’s machinery orders dropped 2.8 percent in March after rising by the same amount in February. Komatsu lost 2.5 percent to 1,959 yen. Daikin Industries Ltd. (6367), which manufactures air-conditioning equipment, slid 1.5 percent to 2,020 yen.

Profit Forecasts

Nichii Gakkan slumped 12 percent to 883 yen after forecasting 11.4 billion yen ($142 million) in operating profit for the year ending March 31, lower than 13.1 billion yen estimated by analysts surveyed by Bloomberg.

Three Japanese companies slid today after an announcement they would be delisted from the MSCI Japan Index at the end of this month. Hiroshima Bank Ltd. lost 9.1 percent to 280 yen, the lowest since 1997. Hokuhoku Financial Group Inc. dropped 9.1 percent to an all-time low 120 yen. Nippon Sheet Glass Co. fell 3.2 percent to 90 yen, its lowest level on record.

Among stocks that advanced, Mizuho Financial Group Inc. (8411), Japan’s third-largest lender by market value, gained 1.8 percent to 116 yen. Mizuho said net income will climb 3.2 percent to 500 billion yen in the year ending March, beating the 378 billion yen average estimate of analysts polled by Bloomberg.

Of the 1,463 companies on the Topix that have posted quarterly results since April 10, 279 exceeded expectations, while 207 missed analysts’ estimates, according to data compiled by Bloomberg News.

The Nikkei 225 Volatility Index (VNKY) added 9.4 percent to 24.21, the highest since Dec. 9, indicating traders expect a swing of 6.9 percent on the benchmark gauge over the next 30 days.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.

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