Japan Stocks Fall on Europe Debt-Crisis Concern

Japanese stocks fell, with the Topix Index falling to the lowest level since early June, as Moody’s Investors Service cut the outlook for Germany’s credit rating and the yen traded near an 11-year high against the euro.

Nintendo Co., a maker of game players that depends on Europe for a third of its sales, fell 2.1 percent. Sharp Corp. (6753) lost 1.7 percent to the lowest since 1975 after the Nikkei newspaper reported the maker of liquid-crystal displays will probably post a wider loss than analysts expected. Toshiba Corp. (6502) fell 5.4 percent after saying it will cut chip production.

The Topix slipped 0.4 percent to 717.67 at the 3 p.m. close of trading in Tokyo. The gauge fell for the 12th day in 13 trading sessions, declining 7.8 percent in the period. The Nikkei 225 Stock Average (NKY) lost 0.2 percent to 8,488.09 today, paring losses after Bank of Japan Governor Masaaki Shirakawa said he’s monitoring the economic impact of the yen’s gains amid Europe’s spreading crisis.

“It’s becoming increasingly obvious that the European situation will take a long time to solve,” said Diane Lin, a fund manager with Sydney-based fund Pengana Capital Ltd., which manages about $1.1 billion in global assets. “Europe is a large economy in the world and it will have a serious impact on the export sector across the region.” She spoke in a Bloomberg TV interview.

Moody’s lowered the Aaa credit rating outlooks for Germany, the Netherlands and Luxembourg, citing “rising uncertainty” about the region’s fiscal crisis. The cuts came after the first call for bailout aid by a Spanish region sent the nation’s borrowing costs surging, while Spain and Italy reinstated a ban on betting on stock declines.

Monitoring Appreciation

Japanese stocks pared losses after Bank of Japan Governor Shirakawa told parliament he’s monitoring the impact of the yen’s gains and Finance Minister Jun Azumi reiterated that policy makers are ready to take action to stem the currency’s appreciation, if needed.

Futures on the S&P 500 were little changed. The gauge lost 0.9 percent yesterday as Spain’s 10-year bond yields rose to a euro-era high on bets more of the country’s regions will ask for aid and a Chinese central-bank adviser said the nation’s economic growth may slow further.

The Nikkei 225 Volatility Index (VNKY) slid 1 percent to 21.15, indicating traders expect a swing of about 6 percent on the benchmark gauge over the next 30 days. The gauge yesterday surged 21 percent, it biggest jump since May 18.

Toshiba fell 5.4 percent to 261 yen, the lowest closing price in more than three years, after saying it will cut production of flash memory by 30 percent as weakened demand for data storage devices helped create a glut.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

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

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