Japanese Stocks Decline on Capital Spending, Rising Yen

Japanese stocks fell for a third day after the nation’s capital spending rose less than expected and the yen strengthened after Federal Reserve Chairman Ben S. Bernanke signaled further bond purchases.

Canon (7751) Inc., a camera maker that gets 27 percent of its revenue in the Americas, fell 1.7 percent. Fanuc Corp. (6954), a producer of robotics for Chinese factories, lost 1.1 percent after China manufacturing output contracted for the first time in nine months. Sharp Corp. (6753) sank 6.1 percent after the Nikkei newspaper reported the television maker offered to cut the price of shares it’s selling to Taiwan’s Foxconn Technology Group.

The Nikkei 225 Stock Average (NKY) fell 0.6 percent to 8,783.89 at the 3 p.m. close in Tokyo, after rising as much as 0.6 percent earlier. Volume was 6.6 percent above the 30-day average. The broader Topix (TPX) Index slid 0.4 percent to 728.63. Shares fell after Japan’s companies spent less than expected in the second quarter.

The capital investment data is “a catalyst for sluggish earnings and is clouding domestic business sentiment,” said Kiyoshi Ishigane, a Tokyo-based strategist at Mitsubishi UFJ Asset Management Co., which oversees about $70 billion. “The yen’s strength has the biggest impact on the Japanese market today. Bernanke’s remarks may have driven the appreciation.”

The Topix was 16 percent below this year’s peak on March 27 on concern economic expansion in China and the U.S. is slowing and Europe’s debt crisis deepening. Stocks on the Topix were valued at 0.9 times book value, compared with 2.2 for the Standard & Poor’s 500 Index 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.

Easing Prospects

Futures on the S&P 500 (SPXL1) slid 0.2 percent today, with the market shut for a holiday. The gauge advanced 0.5 percent in New York on Aug. 31, capping its third monthly gain, after Bernanke said at a symposium of central bankers on Aug. 31 he wouldn’t rule out buying bonds to stimulate growth and fight joblessness.

The yen strengthened after Bernanke’s comments, rising as high as 78.20 against the dollar in Tokyo today, compared with 78.46 at the close of stock trading on Aug. 31. A stronger yen cuts overseas income at Japanese companies when repatriated.

Canon fell 1.7 percent to 2,550 yen. Fuji Heavy Industries Ltd., which makes Subaru cars and earns almost half its sales from North America, declined 1.4 percent to 617 yen.

Japan’s corporate capital spending excluding software gained 6.6 percent in the second quarter, the Finance Ministry said today in Tokyo, missing an estimate for a 7.8 percent rise from six analysts surveyed by Bloomberg News. Spending declined 8.2 percent a year earlier after the record earthquake derailed investment.

China Manufacturing

Exporters fell after the China’s Purchasing Managers Index fell to 49.2 in August from 50.1 in July, the government reported on Sept. 1. The last time the gauge contracted was in November. The purchasing managers’ index released today by HSBC Holdings Plc and Markit Economics had a final reading of 47.6 for August after a preliminary 47.8 provided Aug. 23. The dividing line between expansion and contraction is 50.

“China’s manufacturing is deteriorating day by day as inventories of steel and chemicals climb amid stalled demand,” said Hideyuki Ishiguro, assistant manager of investment strategy at Okasan Securities Co. in Tokyo.

Fanuc slid 1.1 percent to 12,650 yen. TDK Corp. (6762), a manufacturer of electronic parts that gets more than 25 percent of its revenue from China, declined 2.3 percent to 2,917 yen.

Sharp sank 6.1 percent to 186 yen, the biggest decline on the Nikkei 225. The stock fell after the Nikkei newspaper reported the company offered to lower the price of its shares to Foxconn Technology Group and its ratings were cut by Standard & Poor’s. The Taiwanese-based company’s founder left Japan last week without concluding a deal to purchase a stake in Sharp.

-- With assistance from Toshiro Hasegawa in Tokyo. Editor: Jim Powell

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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