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Japanese Stocks Fall, Dragging Topix to Seventh Straight Loss

May 24 (Bloomberg) -- Japanese stocks fell, dragging the Topix index to its seventh straight drop, led by insurers as recent declines in share prices devalued their assets. Equities also slid on concern Europe’s debt crisis will halt a recovery.

Tokio Marine Holdings Inc., an insurer, retreated 1.7 percent. Nikon Corp., which gets 24 percent of its revenue from Europe, dropped 1.6 percent, after the euro weakened. Kawasaki Kisen Kaisha Ltd., Japan’s third-biggest shipping line, rallied 3.6 percent after Nomura Holdings Inc. increased the shipping line’s rating and a gauge of cargo rates advanced.

The Nikkei 225 Stock Average fell 0.3 percent to 9,756.72 at the midday trading break in Tokyo. The Topix dropped 0.2 percent to 878.37, its seventh straight retreat and its longest losing streak since November.

“The declines in insurance shares reflect a drop in the value of their stockholdings as well as the challenging environment for their asset management,” said Hiroyuki Miyahara, director of sales-trading for equities at Tokyo-based Nikko Cordial Securities Inc.

Companies in the Topix trade at 17.1 times estimated earnings on average, compared with 13.4 times for the Standard & Poor’s 500 Index and 11.2 times for the Stoxx Europe 600 Index.

Tokio Marine sank 1.7 percent to 2,493 yen. NKSJ Holdings Inc. lost 3.2 percent to 551 yen, the lowest since the non-life insurance company was formed through a merger on April 1. Insurance companies retreated the most among the Topix’s 33 industry groups.

Nikon Falls

The Stoxx Europe 600 Index slipped 4.6 percent last week to its lowest level in more than six months, on concern that European governments are divided on how to contain the region’s sovereign-debt crisis after Germany unilaterally banned some bets against government bonds and financial institutions.

Nikon slipped 1.6 percent to 1,760 yen. Sony Corp., which gets about 70 percent of its sales outside Japan, dropped 0.7 percent to 2,865 yen. Electronics makers were the biggest drag among the Topix industry groups.

“The euro’s credibility as a currency is declining,” said Miyahara. “The global economy may stagnate on concerns European countries will reduce fiscal spending.”

The yen strengthened to as much as 112.07 per euro today from 113.88 as of the 3 p.m. close of Tokyo stock trading on May 21. Against the dollar, Japan’s currency appreciated to 89.75 from 90.26. A stronger yen reduces the value of overseas sales at Japanese companies when repatriated.

Kawasaki Kisen rose 3.6 percent to 342 yen, while Mitsui O.S.K. Lines Ltd., the operator of the world’s largest merchant fleet, gained 2 percent to 620 yen. Nippon Yusen K.K., Japan’s largest shipping line, climbed 0.3 percent to 325 yen.

Nomura lifted its ratings on the three companies to “buy” from “neutral.” Also, the Baltic Dry Index of shipping rates for commodities climbed 1.1 percent on May 21, its first gain in a week.

To contact the reporters for this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net.

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net.

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