Japanese stocks fell for the first time in four days after Standard & Poor’s said it may strip Europe’s biggest economies of their AAA ratings as the region’s debt crisis spreads.
Toyota Motor Corp., Asia’s biggest carmaker, slid 2.1 percent. Meiji Holdings Co. plunged 9.7 percent after a report that radioactive cesium was found in some of the milk maker’s products. Tosoh Corp., a chemical maker which last month had a plant destroyed by a fire, sank 4.8 percent after Mizuho Securities Co. cut its rating.
“The downgrade news isn’t good because that may cause problems such as a hike in interest rates and other lingering financial issues,” said Naoteru Teraoka, general manager at Tokyo-based Chuo Mitsui Asset Management Co., which oversees about $20 billion. “The market has to take it negatively. Psychologically, it’s not good.”
The Nikkei 225 Stock Average fell 1.4 percent to 8,575.16 at the 3 p.m. close in Tokyo. The gauge rose 6.6 percent in the six days through yesterday as the Federal Reserve and five other central banks cut the cost of borrowing dollars for European banks and China lowered lending curbs. The broader Topix lost 1.4 percent to 738.01 today.
Futures on the Standard & Poor’s 500 Index slipped 0.5 percent. The gauge gained 1 percent in New York yesterday as optimism Europe would tame its debt crisis helped the market weather a late-day selloff after reports S&P put France, Germany and 13 other European countries on review for possible downgrade.
“Systemic stresses in the euro zone have risen in recent weeks to the extent that they now put downward pressure on the credit standing of the euro zone as a whole,” the ratings company said in a statement.
The warning came ahead of a two-day European summit this week aimed at resolving the debt crisis. German Chancellor Angela Merkel and French President Nicolas Sarkozy yesterday said they would push to make the European Union more fiscally integrated, with legal limits on how much debt countries can take on.
Japanese exporters declined as the euro weakened against the yen. Toyota, which gets more than 70 percent of its sales abroad, fell 2.1 percent to 2,606 yen. Sony Corp., an electronic maker that depends on Europe for about 20 percent of its sales, slid 1.9 percent to 1,371 yen. Fanuc Corp., Japan’s top maker of industrial robots, dropped 1.2 percent to 12,870 yen.
Meiji’s Cesium Scare
The yen appreciated to as high as 103.93 against the euro today in Tokyo, compared with 104.50 at the close of stock trading yesterday. Against the dollar, Japan’s currency strengthened to 77.68 from 77.96. A stronger yen cuts overseas income at Japanese companies when repatriated.
Meiji tumbled 9.7 percent to 3,020 yen, the largest drop in the Nikkei 225, after Kyodo news reported radioactive cesium was found in the company’s powdered milk. The company will recall 400,000 cans of the infant formula, according to the report, which said the contamination may be the result of radiation leaked from the wrecked Fukushima nuclear power plant.
Meiji confirmed the report and said the contamination poses no health risk. Shares of other Japanese dairy-producers declined. Morinaga Milk Industry Co. and Megmilk Snow Brand Co. dropped more than 3.5 percent.
Tosoh sank 4.8 percent to 219 yen after Mizuho Securities cut its equity rating to “neutral” from “buy.” The company said on Nov. 15 it would forgo payment of its first-half dividend due to the impact of a fire that killed a worker and destroyed one of its chemical plants in Japan.
Olympus Corp. advanced the most on the Nikkei 225, jumping 9.1 percent to 1,190 yen after Kyodo said the scandal-hit company will hire more outside directors to improve corporate governance. In a report released after the market closed, a panel probing the company’s concealment of investment losses said senior management was “rotten to the core.”
Olympus’ shares have fallen by more than half since Oct 14., when questioned surfaced about over-sized payments to advisors.