Japan Stocks Fall Amid European Debt Crisis Concerns

Japanese stocks fell, with the Topix Index posting its biggest four-day drop since August, as the yen traded near an 11-year high against the euro amid concern Europe’s debt crisis is worsening.

Makita Corp., a toolmaker that gets 40 percent of its sales in Europe, lost 3.1 percent. Murata Manufacturing Co. (6981), a supplier of smartphone parts for Apple Inc. (AAPL)’s iPhone, tumbled 4.2 percent after profit and sales at Apple missed analysts’ estimates. Sony Corp. (6758), Japan’s No. 1 exporter of consumer electronics, dropped 5.2 percent to the lowest since 1980 as the yen rose against its major counterparts after a report showed the country had an unexpected trade surplus in June.

The Nikkei 225 Stock Average (NKY) dropped 1.4 percent to 8,365.90 at the close of trading in Tokyo. The broader Topix Index slipped 1.6 percent to 706.46, losing 5.4 percent in the last four days. The broadest measure of Japanese stocks fell for the 13th time in 14 days and has slumped 19 percent from this year’s highest level in March amid concern Greece won’t meet its debt-reduction targets and as growth slowed in China and the U.S.

“Sentiment has deteriorated so much that investors are ignoring cheap valuations and selling to cut their losses,” said Goya Nakao, a senior investment manager at Sompo Japan Nipponkoa Asset Management Co., which oversees about 5 trillion yen ($63 billion). “Stocks and sectors that are highly dependent on external demand just keep falling.”

Valuations Fall

Declines since March left shares on the Topix valued at 0.8 times book value, compared with 2.1 for the Standard & Poor’s 500 Index and 1.4 for the Stoxx Europe 600 Index. A number below one means investors can buy companies for less than the value of their assets.

The Nikkei 225 Volatility Index (VNKY) gained 7 percent to 22.64, the highest in a month, indicating traders expect a swing of about 6.5 percent on the benchmark gauge over the next 30 days.

Companies exporting into Europe fell as Greek Prime Minister Antonis Samaras prepares to meet with the country’s troika of international creditors representing the European Commission, the European Central Bank and the International Monetary Fund on July 27.

Makita lost 3.1 percent to 2,482 yen. Mitsubishi Motors Corp., that makes 26 percent of sales in Europe, declined 2.9 percent to 68 yen.

Suppliers to Apple declined after the world’s largest company by market value predicted further declines in sales and profit for the current period from last quarter. Murata sank 4.2 percent to 3,815 yen.

Toshiba Plunges

Toshiba Corp., which makes chips used in Apple’s iPads, sank 7.3 percent to 242 yen as CLSA Asia-Pacific Markets recommended investors sell the stock.

Sony slid 5.2 percent to 870 yen. Japan posted a record trade deficit of 2.9 trillion yen in the six months ended June. Japan’s government said this week that signs of a global slowdown have increased as it became more pessimistic about the prospects for China, Japan’s largest trading partner.

Among stocks that gained, Softbank Corp. climbed 4 percent to 2,946 yen as Bank of America Corp. named the telecommunications company among its top picks.

To contact the reporters on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net; Satoshi Kawano in Tokyo at skawano1@bloomberg.net

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

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