Japanese Shares Fall as Yen Climbs on Europe, U.S. Homes

Japanese shares fell, paring the Topix Index’s best quarter since 1988, after the yen strengthened on concern Europe’s debt crisis will intensify and as pending U.S. home sales slid.

Toyota Motor Corp. (6674), the world’s biggest automaker, fell 1.5 percent. Nippon Sheet Glass Co., which counts Europe as its biggest market, slumped 2.8 percent. GS Yuasa Corp. tumbled 11 percent after one of its battery packs was blamed for a fire at a Mitsubishi Motors Corp. factory. Sharp Corp. dropped 3.6 percent on a report it may seek private-equity funding and sell shares, according to two people familiar with the situation. A deadline passed yesterday for Foxconn Technology Group to invest in the unprofitable television maker.

The Topix lost 0.9 percent to 1,036.78 at the close in Tokyo. The gauge is up 21 percent this year, headed toward its best quarterly performance since March 1988. The Nikkei 225 Stock Average slid 1.3 percent to 12,335.96. The measure rose 6.7 percent this month, the eighth in a row it’s climbed.

“Sentiment abroad is getting worse, and there are fewer foreign investors willing to take risks,” said Tomomi Yamashita, a senior fund manager who helps oversee about 500 billion yen ($5.3 billion) at Shinkin Asset Management Co. in Tokyo. “Exporters are being sold as concerns about the yen increase. We’re waiting to see Japanese jobs data tomorrow and the upcoming Bank of Japan meeting next month because right now there’s not much reason to buy.”

Volume on the Topix was 10 percent below its 30-day average, according to data compiled by Bloomberg. The gauge rallied 44 percent from Nov. 14, when elections were announced that brought Prime Minister Shinzo Abe to power on a platform of increased stimulus and central bank easing. The gauge is trading at 1.2 times book value, compared with 2.2 for the Standard & Poor’s 500 Index and 1.5 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

U.S. Housing

Futures on the S&P 500 declined 0.3 percent today. The U.S. equity gauge slid 0.1 percent in New York yesterday as fewer Americans signed contracts to purchase previously owned homes in February, the National Association of Realtors reported, indicating a pause in momentum for an industry that is helping power the recovery.

The yen gained 0.4 percent against the dollar and 0.3 percent to the euro today as Italy’s bonds slumped, pushing the 10-year yield to the highest relative to German bunds this year. Japan’s 10-year government note hit an almost 10-year high as investors sought refuge from potential worsening of the crisis.

Italy Impasse

Italy’s main political parties are unable to form a government one month after elections. Cyprus’s banks will reopen for the first time in two weeks, with new rules curbing access to cash as part of capital controls imposed after the nation secured a euro-zone bailout.

The Nikkei Stock Average Volatility Index (VNKY) rose 3.3 percent to 26.49 today, indicating traders expect a swing of about 7.6 percent on the benchmark gauge over the next 30 days.

Exporters were the biggest negative influences on the Topix today. Toyota lost 1.5 percent to 4,825 yen, the No. 1 drag on the measure. Honda Motor Co., which gets 80 percent of its sales outside Japan, was the third-biggest weight, sinking 1.6 percent to 3,600 yen. Canon Inc., the world’s largest camera maker, retreating 2.1 percent ot 3,450 yen.

GS Yuasa tumbled 11 percent to 392 yen, the biggest drop on the Nikkei 225. The company blamed for overheating batteries that led to the grounding of all Boeing Co. Dreamliner planes, fell after Mitsubishi Motors Corp. said that one lithium-ion car battery produced by a GS Yuasa unit caught fire and another melted. Mitsubishi Motors fell 3.9 percent to 98 yen, the lowest since Jan. 31.

Sharp fell 3.6 percnet to 268 yen, its fifth straight day of declines. The company is considering selling shares to the public or may seek investments from private equity funds to replenish dwindling cash levels, two people familiar with the matter said,

To contact the reporter on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net

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

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