Topix Falls Fifth Day After Yen Gains on Portugal Concern

Japan’s Topix index fell a fifth day, capping its biggest weekly loss in three months, after the yen gained as signs of financial stress in Portugal raised concerns the euro-area recovery remains fragile.

Honda Motor Co., which gets about 84 percent of its revenue abroad, dropped 1.6 percent. Mitsui Engineering & Shipbuilding Co. slid 2.4 percent after trading company Mitsui & Co. pared its stake. Fast Retailing Co. lost 1.9 percent after Asia’s biggest clothing retailer cut its profit forecast. Canon Inc. posted its biggest gain in five months after a report operating profit rose above estimates at the maker of photocopiers.

The Topix (TPX) sank 0.3 percent to 1,255.19 at the close of trading in Tokyo, with about twice the number of shares falling as rising. The measure fell 2.3 percent this week, the most since the period ended April 11. The Nikkei 225 Stock Average decreased 0.3 percent today to 15,164.04. The yen gained 0.1 percent to 101.26 per dollar after rising 0.3 percent yesterday, when the Stoxx Europe 600 Index fell to a two-month low.

“The European stock market is crumbling, and that’s spreading to the U.S. market and also hurting Japanese shares,” said Yutaka Miura, a senior technical analyst at Mizuho Securities Co. “There may be an impact because of the currency and U.S. shares, but if the correction in Western equities is contained, the effect on Japan should be limited.”

Europe Concern

Futures on the Standard & Poor’s 500 Index added 0.1 percent. The measure declined 0.4 percent yesterday, resuming a selloff started earlier this week, as reignited concerns over Europe’s economy triggered demand for haven assets.

Espirito Santo International, a parent of Banco Espirito Santo SA, Portugal’s second-largest lender, missed debt payments, suggesting Europe remains vulnerable to shocks in the wake of its sovereign-debt crisis.

The Stoxx 600 fell 1.1 percent at the close of trading in London yesterday, the lowest since May 7, as a gauge of lenders declined to its lowest level this year. Banks in Portugal, Italy and Spain sank, sending an industry measure to the fourth slump in five days.

“There was a fairly sharp reaction in the European markets on this surprise news,” said Tim Schroeders, a portfolio manager who helps oversee $1 billion in equities at Pengana Capital Ltd. in Melbourne. “It’s a concern, but I don’t think there’s risk of contagion. People aren’t seeing it as a systematic risk but rather a company-specific issue.”

Banks, Exporters

The Topix Banks Index slid 0.7 percent, the biggest drag on the broader gauge. Mitsubishi UFJ Financial Group Inc., Japan’s largest lender, fell 1 percent to 599 yen.

Automakers were the second-biggest drag on the Topix. Honda dropped 1.6 percent to 3,515 yen. Toyota Motor Corp. (7203), the world’s biggest car manufacturer, fell 0.4 percent to 5,981 yen. Nissan Motor Co., which gets about 16 percent of its sales from Europe, lost 0.2 percent to 971 yen.

Mitsui Engineering & Shipbuilding Co. fell 2.4 percent to 204 yen after Mitsui & Co. cut its stake in the company to about 3.1 percent from 5.2 percent.

Fast Retailing slid 1.9 percent to 32,855 yen after cutting its annual net-income forecast for the second time in the current fiscal year on losses at its J Brand premium-denim unit in the U.S. Net income will probably be about 78 billion yen ($769.7 million) for the year ending August, below its previous forecast of 88 billion yen and missing an 88.5 billion yen average estimate from 18 analysts compiled by Bloomberg.

Canon gained 2.4 percent to 3,338 yen, the most since Feb. 18, after the Nikkei newspaper reported the company will probably report operating profit of about 110 billion yen on strong copier sales.

The Topix advanced 9.1 percent from a May 21 low, paring its drop for the year to 3.6 percent. The gauge traded at 1.2 times book value today, compared with 2.7 for the S&P 500 and 1.8 for the Stoxx Europe 600 Index yesterday. Volume on the Japanese gauge was about in line with the 30-day average.

To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Yuko Takeo in Tokyo at ytakeo2@bloomberg.net

To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net Tom Redmond, Jim Powell

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