May 11 (Bloomberg) -- Japanese stocks fell, led by banks, on speculation Mizuho Financial Group Inc. will sell shares, and on concern China will boost interest rates to curb inflation.
Mizuho, the nation’s No. 3 bank by market value, lost 4.7 percent after a person familiar with the plan said it will sell 1 trillion yen ($11 billion) in shares. Sumitomo Mitsui Financial Group Inc., Japan’s second-largest publicly traded bank, dropped 3.6 percent after the Nikkei English News said the company will double its share issuance limit. Komatsu Ltd., the world’s No. 2 maker of construction equipment that counts Asia as its largest market, slumped 3.4 percent on concern demand in China will decline.
The Nikkei 225 Stock Average fell 1.1 percent to 10,411.10 at the 3 p.m. close in Tokyo. The broader Topix index declined 1.3 percent to 932.10, with more than twice as many stocks falling as rising. Both gained as much as 1 percent earlier. Shares reversed advances amid concerns over the Greek debt crisis and after China said inflation accelerated.
“Investors are likely to be wary about further gains in share prices after the global rally,” said Junichi Misawa, head of equity investment at Tokyo-based STB Asset Management Co., which oversees about $14 billion. “Their concerns have not been completely removed.”
In New York, the Standard & Poor’s 500 Index jumped 4.4 percent to 1,159.73, the biggest gain since March 2009, after European policy makers announced a loan package of almost $1 trillion to contain the region’s sovereign-debt crisis.
The Topix has gained 2.7 percent in 2010, compared with a climb of 4 percent by the S&P 500 and an increase of 0.1 percent by the Stoxx Europe 600 Index. Stocks in the Japanese benchmark are valued at 18.6 times estimated earnings, compared with 14.4 times for the S&P and 12 times for the Stoxx.
Banks were the second-biggest drag on the Topix. Mizuho plans to sell about 1 trillion yen of stock to bolster capital, according to a person with knowledge of the plan. Mizuho plunged 4.7 percent to 163 yen, the steepest slide since Nov. 19. Mitsubishi UFJ Financial Group Inc., Japan’s largest bank by market value, sank 1.7 percent to 460 yen.
Sumitomo Mitsui Financial Group tumbled 3.6 percent to 2,815 yen, a level not seen in three months. The Nikkei English News said the lender decided to double the limit on the number of shares it can issue to about 3 billion. The bank said it isn’t planning additional common stock sales, in a response to the report.
“Concerns are rising that the supply-demand situation for stocks will worsen,” said Tsutomu Yamada, a market analyst at kabu.com Securities Co. “More companies may increase their capital by the end of June when many shareholder meetings will take place.”
Companies reliant on China business fell after the country said inflation accelerated. Komatsu, the world’s No. 2 maker of construction equipment that counts Asia as its largest market, slumped 3.4 percent to 1,734 yen. Hitachi Construction Machinery Co., an excavator maker that gets 26 percent of its sales in China, retreated 2.5 percent to 1,887 yen.
Consumer prices in China increased 2.8 percent in April from a year ago, the fastest pace in 18 months, and property prices jumped 12.8 percent, the statistics bureau said in statements today. New lending of 774 billion yuan ($113 billion), announced by the central bank, was more than any of 24 economists forecast.
Shipping lines and commodity traders dropped on concern demand from China will weaken if the government tightens its financial policy.
Mitsubishi Corp., Japan’s No. 1 commodities trader, declined 2.5 percent to 2,075 yen, the lowest close since Dec. 2. Marubeni Corp., a smaller rival, fell 2.6 percent to 528 yen. Mitsui O.S.K. Lines Ltd., the second-largest shipping line by sales, retreated 2.3 percent to 646 yen. Kawasaki Kisen Kaisha Ltd., the No. 3 by sales, slumped 1.6 percent to 369 yen.
“Speculation increased that China will tighten monetary policies and demand in the region will drop,” said Yoshinori Nagano, a senior strategist at Tokyo-based Daiwa Asset Management Co., which oversees the equivalent of $91 billion. “People are becoming concerned about negative impacts on Japanese companies.”
Sumitomo Heavy Industries Ltd. jumped 3.9 percent to 593 yen, the second-biggest gain in the Nikkei. The machine producer beat its profit outlook for last year and forecast a 24 percent increase in net income to 16.5 billion yen in fiscal 2010. The company also said it will spend 2.2 billion yen to build a construction-machinery plant in Indonesia.
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