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Japanese Stocks Fall the Most in Two Weeks on U.S. Homes, Yen

June 23 (Bloomberg) -- Japanese stocks fell the most in more than two weeks on concern the U.S. economic recovery may falter after home sales in the country unexpectedly dropped.

Toyota Motor Corp., a carmaker that generates 67 percent of its revenue abroad, sank 1.7 percent as the dollar and euro weakened against the yen. Mitsubishi Corp., a trading company that relies on commodities for 41 percent of its sales, lost 1.5 percent after oil and copper prices decreased. Nippon Yusen K.K. led shipping lines lower after a gauge of freight rates declined for an 18th day.

“Investors are avoiding risk because concern is emerging that the global economy will slow,” said Tomomi Yamashita, a fund manager in Tokyo at Shinkin Asset Management Co., which oversees about $6 billion. “This isn’t the right time to draw up an investment strategy.”

The Nikkei 225 Stock Average fell 1.9 percent to close at 9,923.70 in Tokyo, the biggest decrease among equity benchmarks in the Asia-Pacific region. The broader Topix index lost 1.5 percent to 880.84, with almost eight stocks declining for each that advanced. Both gauges dropped the most since June 7.

The Nikkei 225 lost 1.2 percent yesterday on renewed concern Europe’s debt crisis will hurt the global economy after Standard & Poor’s Ratings Services cut its forecast for economic growth in Spain, and Fitch Ratings lowered the credit grade of France’s biggest bank.

“I’ve already sold what has to be sold and I’m paying close attention to individual stocks,” Yamashita said.

The Nikkei 225 has risen 5.1 percent from this year’s low on June 9 as reports showed New York manufacturing grew, sentiment among American consumers improved and China signaled an end to the yuan’s fixed rate against the dollar.

U.S. Housing

The increases have driven the average price of shares in the gauge to 18.5 times estimated earnings, compared with 17.6 times on June 9, the lowest level since December 2008.

Futures on the Standard & Poor’s 500 Index rose 0.2 percent. The index dropped 1.6 percent in New York yesterday, the most since June 4, after the National Association of Realtors said purchases of existing houses fell 2.2 percent in May month-on-month, compared with the 6 percent gain estimated by economists.

Japanese companies reliant on overseas demand retreated today as the weaker dollar and euro cut the value of overseas income when converted into their home currency.

Toyota, the world’s biggest automaker, slumped 1.7 percent to 3,220 yen and was the heaviest drag on the Topix. Nintendo Co., a game-machine maker that derives 85 percent of its revenue outside Japan, slid 3.6 percent to 27,280 yen in Osaka trading.

Yen, Commodities, Shipping

The yen strengthened to as much as 90.34 versus the dollar today from 90.81 at yesterday’s close of stock trading in Tokyo. It appreciated 110.78 against the euro from 111.61.

The outlook for the U.S. economy also drove down commodity producers. Mitsubishi, Japan’s biggest trading company by market value, lost 1.5 percent to 1,990 yen. Inpex Corp., the nation’s No. 1 oil and gas explorer, slumped 2.9 percent to 534,000 yen. Mitsui Mining & Smelting Co. retreated 2.6 percent to 264 yen.

Crude oil for August delivery slid as much as 1 percent today, adding to a 1 percent drop yesterday. Copper futures for September delivery lost 0.5 percent, the first slump this week. Mining companies posted the steepest plunge among the Topix’s 33 industry groups, followed by shipping lines.

Nippon Yusen sank 3.6 percent to 344 yen. Mitsui O.S.K. Lines Ltd., Japan’s No. 2 shipping line, declined 2.7 percent to 641 yen. The Baltic Dry Index of shipping rates for commodities fell for an 18th session yesterday.

To contact the reporters on this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net.

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

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