Japan’s Nikkei 225 Falls From 4-Year High on Euro Concern

Japanese shares fell, with the Nikkei 255 Stock Average falling from its highest since 2008, after Italian elections reignited concern the region’s debt crisis will hurt financial markets.

Nippon Sheet Glass Co., which counts Europe as its biggest market, slumped 3.5 percent. Japan Tobacco Inc. (2914) dropped 0.7 percent after the government said it will sell a stake in the cigarette maker. Kawasaki Kisen Kaisha Ltd. jumped to its highest since August 2011, leading an advance by shipping companies. Medical Care Service Co., which operates nursing homes, jumped 7.1 percent in Nagoya after Sanko Soflan Holdings Co. offered to buy the company.

The Nikkei 225 lost 2.3 percent to close at 11,398.81 in Tokyo, dropping the most since Jan. 16. The measure yesterday closed at its highest since September 2008. The broader Topix Index lost 1.4 percent to 966.77, with about four shares falling for each that gained.

“If Italy, which has a large economy, is denied its route towards austerity, then we’ll undoubtedly see a renewal of uncertainty about Europe,” said Fumiyuki Nakanishi, a Tokyo- based senior strategist at SMBC Friend Securities Co. “It reminds me of Greece last year when their election uncertainty caused turmoil in the financial markets.”

The Topix surged 34 percent since Nov. 14 amid optimism Prime Minister Shinzo Abe and the central bank will lead the country out of deflation. The measure is trading at 1.1 times book value, compared with 2.1 for the Standard & Poor’s 500 Index and 1.5 for the Stoxx Europe 600 Index.

Italian Election

Futures on the S&P 500 gained 0.2 percent today. The measure slumped 1.8 percent yesterday, the biggest drop since Nov. 7, as Italy’s election spurred concern the nation may reject austerity and worsen Europe’s debt crisis.

Italy may need another vote after partial election results suggested the race may end in a divided parliament, according to an aide to Democratic Party candidate Pier Luigi Bersani.

Sony Corp., which counts Europe as its biggest overseas market, dropped 3.7 percent to 1,290 yen. Nissan Motor Co., an automaker that gets 16 percent of its revenue from Europe, fell 2.6 percent to 916 yen. Nippon Sheet Glass (5202) slumped 3.5 percent.

“The Italian elections are causing uncertainty about political stability, but this time the euro region has a safety net with its unlimited bond-purchase plan,” said Norihiro Fujito, a Tokyo-based senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co.

Among other stocks that fell, Japan Tobacco lost 0.7 percent to 2,880 yen. The Ministry of Finance, which owns about 1 billion shares, or 50 percent, of the cigarette maker, will offer as many as 333.3 million shares next month, it said yesterday in a regulatory filing.

Kawasaki Kisen

For stocks that rose, Kawasaki Kisen jumped 6.9 percent to 217 yen. The company was raised to buy from hold by Jefferies Group Inc., which also increased the shipping company’s target share price to 250 yen from 110 yen.

Medical Care Service jumped 7.1 percent to 227,000 yen, its biggest gain since March 2009. Sanko Soflan offered to buy shares of the nursing home operator for 294,000 yen apiece, according to a statement to the Tokyo Stock Exchange.

The Nikkei Stock Average Volatility Index (VNKY) gained 1.8 percent to 28.47, indicating traders expect a swing of about 8.2 percent of the benchmark gauge over the next 30 days. Volume on the measure was about 2.4 percent higher than the 30-day intraday average at the close.

To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net

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

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