Japanese Stocks Fall as U.S. Growth Damps Stimulus Hopes

Japanese shares fell, with the Nikkei 225 (NKY) Stock Average falling to a two-week low, after U.S. economic growth damped speculation Federal Reserve Chairman Ben S. Bernanke may announce a third round of quantitative easing. Stocks also fell as Japan’s retail sales sank more than expected.

Nissan Motor Co. (7201), a carmaker that gets almost a third of its sales from North America, slid 1.2 percent even after its price target was raised by Credit Suisse Group AG. Electronics retailer Yamada Denki Co. lost 4.1 percent. Furukawa Electric Co. gained the most in the Nikkei 225 after its aluminum unit agreed to take over Sumitomo Light Metal Industries Ltd.

The Nikkei 225 slid 1 percent to 8,983.78 at the 3 p.m. close in Tokyo, the lowest since Aug. 15. Volume was 15 percent below the 30-day average ahead of the Fed chairman’s speech tomorrow at a central bankers’ conference in Wyoming. The broader Topix (TPX) Index lost 0.8 percent to 743.79, with more than three shares dropping for each that gained.

“Investors are concerned that strong economic data out of the U.S. may delay QE3,” said Yoshihisa Okamoto, who helps oversee about $34 billion at Mizuho Asset Management Co. Investors aren’t buying shares “because even though the U.S. economic data was good, they won’t have a full picture until Bernanke’s speech.”

The Topix rebounded 6.9 percent from this year’s low on June 4 amid speculation global central banks will act to stimulate economic growth. Stocks on the gauge are valued at 0.9 times book value, compared with 2.2 for the S&P 500 and 1.5 for the Europe Stoxx 600 Index. A number less than one means companies can be bought for less than the value of their assets.

Futures on the Standard & Poor’s 500 Index slid 0.3 percent today. The gauge gained 0.1 percent yesterday on a report gross domestic product expanded at an annualized 1.7 percent rate from April through June, beating an initial estimate of 1.5 percent.

Gradual Expansion

The U.S. economy continued to expand “gradually” in July and early August as improving housing and retail sales helped outweigh a weakness in manufacturing, the Fed said in its Beige Book business survey based on reports from its 12 districts. The report reflects information collected on or before Aug. 20.

“Investors who expect Bernanke to deliver a clear commitment to QE3 might be disappointed, which could trigger some sort of sell-off,” said Mikio Kumada, a Singapore-based global strategist for LGT Capital Management, which oversees more than $20 billion. “This is still not a time to bet against major central banks’ ability to intervene in markets.”

Nissan, which relies on North America as its biggest market, slid 1.2 percent to 741 yen even after Credit Suisse Group boosted the stock price estimate to 970 yen to 760 yen, saying Nissan is undervalued because new model launches will boost global market share. Toyo Tire & Rubber Co., which gets a third of its revenue from North America, slid 2.3 percent to 215 yen.

Japanese retailers fell after the nation’s retail sales fell more than estimated in July as the government phases out subsidies for car purchases, damping consumer spending. The 0.8 percent fall from a year earlier was the first drop in eight months and compared with the median estimate of a 0.1 percent fall, according to a Bloomberg News survey of 13 economists.

Retailers Drop

Yamada Denki sank 4.1 percent to 3,840 yen. Department- store operator Isetan Mitsukoshi Holdings Ltd. slipped 1.5 percent to 832 yen.

Furukawa Electric, a cable maker that owns 53 percent of Furukawa-Sky Aluminum Corp., jumped 4.6 percent to 161 yen, the most on the Nikkei 225, after the aluminum unit agreed to take over Sumitomo Light Metal Industries Ltd. Furukawa-Sky, Japan’s top maker of rolled aluminum products, rose 2.9 percent to 214 yen, while Sumitomo Light Metal tumbled 5.2 percent to 73 yen.

-- With assistance from Adam Haigh in Sydney. Editor: Jim Powell, Stuart Biggs

To contact the reporter on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net

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

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