Japan Stock Futures Drop as Europe Debt Talks Deadlocked

Japanese stock futures fell amid concern that talks among European leaders to resolve the region’s debt crisis are deadlocked, curbing the earnings outlook for Asian exporters. Australian equity futures were little changed.

American Depositary Receipts of Canon Inc. (7751), the Japanese camera maker that gets 30 percent of its sales in Europe, slid 0.8 percent. Shares of Renesas Electronics Corp. (6723) may be active after an executive of Japan’s state-backed corporate rescue fund said it may join the nation’s largest manufacturers to take over the unprofitable Japanese chipmaker, countering a bid by U.S. private-equity firm KKR & Co.

Futures on Japan’s Nikkei 225 Stock Average expiring in December closed at 9,035 in Chicago on Sept. 21, down from 9,060 in Osaka, Japan. They were bid in the pre-market at 9,030 in Osaka at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index were little changed today. New Zealand’s NZX 50 Index rose 0.1 percent in Wellington.

“A period of consolidation in the month ahead looks the more likely outcome,” said George Boubouras, Melbourne-based head of investment strategy at UBS AG’s Australian wealth management unit. The Swiss bank has about $1.5 trillion in assets under management. “In Europe, there will continue to be some lingering challenges. As we approach the end of the quarter, investors will fine-tune and adjust their portfolios across all the asset classes. This will include some profit taking and portfolio rotation.”

Annual Gain

The MSCI Asia Pacific (MXAP) index climbed 8.5 percent this year through the end of last week and 5.4 percent this quarter as central banks in Europe, the U.S. and Japan took action to stimulate economic growth. That compares with a 2012 gain of 16 percent on the Standard & Poor’s 500 Index and a 13 percent advance on the Stoxx Europe 600 Index. (SXXP) The Asian benchmark traded at 12.8 times estimated earnings compared with 14.1 for the S&P 500 and 12.2 for the Stoxx Europe 600 Index.

Last week, the MSCI Asia Pacific Index dropped 0.1 percent, halting a two-week advance, as an escalating territorial dispute between Japan and China and signs of a deeper economic slump overshadowed unexpected stimulus measures by the Bank of Japan.

Futures on the Standard & Poor’s 500 Index advanced 0.1 percent today. Consumer spending in the U.S. probably stagnated in August after adjusting for inflation, showing the economic expansion is struggling to gain momentum, economists said before a report due Sept. 28.

Europe Deadlock

German Chancellor Angela Merkel and French President Francois Hollande underlined Franco-German disagreement over the weekend as they clashed on a timetable to introduce joint oversight of the region’s banking sector, with Merkel rebuffing Hollande’s appeal to activate it “the earlier, the better.”

China’s manufacturers and retailers are less optimistic about sales than they were three months ago and more companies are cutting jobs, according to a survey modeled on the U.S. Federal Reserve’s Beige Book.

The China Beige Book, through interviews of more than 2,000 company executives and bankers from Aug. 9 to Sept. 3, found limits to monetary easing after interest-rate cuts in June and July, with banks loosening credit while fewer companies are borrowing, according to a summary from CBB International LLC, the New York-based researcher that conducted the survey.

The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. dropped 2.2 percent last week to 91.88.

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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