Topix Declines to Two-Week Low on Industrial Production

Japanese stocks retreated, with the Topix (TPX) Index falling to a two-week low, after industrial production missed estimates, signaling a worsening outlook for manufacturers as the global slowdown deepens.

Machinery-maker Amada Co. (6113) slid 2.3 percent. Advantest Corp. (6857), the world’s biggest producer of memory-chip testers, sank 2.9 percent after semiconductor-manufacturer Micron Technology Inc. reported a wider loss. Nippon Yusen K.K. fell after Japan’s top shipping lines were downgraded to underperform by Bank of America Merrill Lynch.

The Topix lost 1.1 percent to 737.42 at the 3 p.m. close in Tokyo, the lowest close since Sept. 11. The Nikkei 225 Stock Average (NKY) fell 0.9 percent to 8,870.16 after rising as much as 0.4 percent. The gauge slid 2.6 percent for the week, extending a 1.8 percent monthly decline. Shares also fell ahead of the Bank of Japan’s Tankan survey, which on Monday is expected to show declining confidence among manufacturers.

“Worse-than-expected industrial production is fueling negative sentiment,” said Kenichi Hirano, general manager and strategist at Tachibana Securities Co. in Tokyo. “Investors may be selling shares on worries the Tankan may be worse than the real economy because it’s based on a survey, and could reflect negative public sentiment from deteriorating relations with China.”

Manufacturers’ shares fell after the Trade Ministry today reported the nation’s industrial production in August fell 1.3 percent from the previous month. The median estimate of 26 economists surveyed by Bloomberg was for 0.5 percent decline.

Tankan Preview

The BOJ’s quarterly Tankan index of confidence among large manufacturers probably fell for a fourth quarter, according to the median estimate of economists surveyed by Bloomberg. Japanese companies operating in China, its biggest trading partner, have shut factories amid violent protests spurred by a territorial dispute.

Amada fell 2.3 percent to 342 yen. Okuma Corp., a maker of machine tools and other industrial machinery, slipped 1.7 percent to 461 yen.

Futures on the Standard & Poor’s 500 were little changed today. The gauge advanced 1 percent yesterday, halting a five- day slump, after fewer Americans than forecast filed first-time claims for unemployment last week. Equities rose even after data showed that the U.S. economy grew 1.3 percent in the second quarter, less than previously estimated.

Spanish Prime Minister Mariano Rajoy’s government announced its fifth austerity package in what may be a move to head off tougher conditions as part of a potential European bailout. Greek Prime Minister Antonis Samaras clinched agreement with political leaders on the bulk of a 13.5 billion-euro ($17.4 billion) budget package that’s key to receiving international aid.

Quarterly Decline

The Topix has dropped 4.2 percent this quarter on speculation a global wave of stimulus from the U.S., Europe, China and Japan won’t be enough to reverse a slowdown in growth.

Chip stocks declined after Micron Technology, the largest U.S. maker of memory chips, reported a wider fourth-quarter loss and lower revenue as lackluster demand for personal computers reduced sales of components.

Advantest lost 2.9 percent to 1,015 yen. The shares also declined after the company’s investment rating was cut to neutral from outperform at Macquarie Group Ltd., which cited a less favorable outlook for orders in the second half. Tokyo Electron Ltd. fell 2.2 percent to 3,325 yen.

Shipping companies led declines among the Topix’s 33 industry groups after Merrill Lynch recommended selling Japan’s top biggest shipping lines on balance sheet concerns.

Nippon Yusen K.K., Japan’s top shipper by sales, slid 3.5 percent to 138 yen. Mitsui O.S.K. Lines Ltd., the second biggest, lost 3.2 percent to 182 yen. Kawasaki Kisen Kaisha Ltd slipped 2 percent to 98 yen.

Aozora Buyback

Among companies that gained, Aozora Bank Ltd. climbed 3 percent to 239 yen after shareholders approved the lender’s plan to repay taxpayers’ money and buy back as much as 100 billion yen ($1.3 billion) in shares.

The stock fell 9 percent yesterday after announcing that Cerberus Capital Management LP, a private-equity firm that controls Aozora, plans to sell a stake in the bank.

-- With assistance from Toshiro Hasegawa in Tokyo. Editors: Jim Powell, Jason Clenfield

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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