Japan Stocks Fall From Highest Since 2010 on Euro Concern

Japanese shares fell, with the Nikkei 225 (NKY) Stock Average retreating from its highest in 32 months, as Hitachi Ltd. and Fujikura Ltd. cut their forecasts and concern about Europe’s debt crisis deepened.

Hitachi, a maker of electronics and machinery, declined 6.4 percent, while cable-manufacturer Fujikura tumbled 7.3 percent. Konica Minolta Holdings Inc. (4902), a producer of imaging equipment that gets 28 percent of its sales in Europe, dropped 3.1 percent. Nippon Sheet Glass Co. (5202) led gains on the Nikkei 225 after Daiwa Securities Group Inc. (8601) recommended the shares. Toyota Motor Corp. (7203) slid 1.2 percent before posting earnings at the close.

The Nikkei 225 lost 1.9 percent to 11,046.92 in Tokyo after yesterday closing at its highest since April 15, 2010. Volume was about 65 percent above the 30-day average for the time of a day. The broader Topix Index fell 1.7 percent to 939.70, with about four stocks dropping for each that gained.

“Investors are using the European issue as an excuse to adjust their positions,” said Hitoshi Asaoka, a Tokyo-based senior strategist at Mizuho Trust & Banking Co., a unit of Japan’s third-largest bank by market value. “Investors are also paying attention to factors for individual stocks.”

The Topix has surged 30 percent since Nov. 14, when national elections were announced on optimism Prime Minister Shinzo Abe’s new government will take steps to fight deflation. The gauge is trading at 1.11 times book value, compared with 2.07 for the Standard & Poor’s 500 Index and 1.47 for the Stoxx Europe 600 Index.

Of the 159 companies on the Topix that have reported earnings so far this quarter and for which Bloomberg has estimates, 61 percent have exceeded profit expectations. Some 52 percent missed sales projections, the data show.

Lower Expectations

Hitachi (6501) dropped 6.4 percent to 531 yen. The company trimmed its net-income forecast after missing estimates for third- quarter operating profit. Fujikura slid 7.3 percent to 266 yen after cutting its profit projection to zero for the fiscal year from an earlier outlook of a 2 billion yen gain.

Toyota fell 1.2 percent to 4,540 yen. After the close, the world’s biggest carmaker raised its profit forecast as the falling yen boosted the value of overseas sales.

Japan Airlines Co. jumped 5.1 percent to 4,010 yen, the most since the carrier re-listed in 2012, after forecasting profit that beat analysts’ estimates. JAL said demand for travel to Europe and the U.S. outweighed the grounding of its Boeing Co. 787s amid safety concerns.

European Woes

Futures on the S&P 500 added 0.2 percent today. The gauge fell 1.2 percent yesterday, while the Stoxx Europe 600 slid 1.5 percent. Spanish Premier Mariano Rajoy is facing calls to resign amid contested reports about illegal payments, and Italy’s Silvio Berlusconi narrowed the front-runner’s lead before elections this month.

“European nations are working on fiscal rehabilitation, but concerns will mount about debt reduction measures if their political leaderships get shaky,” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co.

Konica Minolta dropped 3.1 percent to 722 yen. Shimano Inc., a maker of bicycle parts that depends on Europe for 36 percent of its sales, fell 1.8 percent to 6,090 yen.

Nippon Sheet Glass jumped 18 percent to 118 yen after Daiwa upgraded its rating to buy, saying restructuring benefits are appearing gradually.

The Nikkei Stock Average Volatility Index added 1.3 percent to 23.96, indicating traders expect a swing of about 6.9 percent on the benchmark gauge over the next 30 days.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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

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