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Japan Stocks Drop as Greece Fuels Euro Exit Concerns

May 9 (Bloomberg) -- Japanese stocks fell, with the Topix Index closing at a three-month low, as Greek political tension fueled concern the debt-stricken nation will be the first to exit the euro, dimming the earnings outlook for exporters.

Mitsubishi Motors Corp., an automaker that gets 27 percent of its sales from Europe, dropped 2.3 percent. NTT Data Corp. slumped 12 percent after the network service provider forecast net income that missed analyst estimates. Seasonings maker Ajinomoto Co. jumped 7.4 percent after announcing a plan to buy back shares.

The Topix declined 1.4 percent to 765.83 at 3 p.m. in Tokyo, its lowest close since Feb. 3. The Nikkei 225 Stock Average dropped 1.5 percent to 9,045.06 with nine stocks falling for each that advanced. Trading volume on the measure was 8.2 percent above the 30-day average.

“Investors are turning risk averse,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages the equivalent of $63 billion. “We don’t know what kind of political coalition will be formed in Greece. It remains unclear if the nation will exit the euro and if that will actually break up the euro.”

Futures on the Standard & Poor’s 500 Index fell 0.2 percent today. The gauge declined 0.4 percent to a month low in New York yesterday after Alexis Tsipiris, leader of Greece’s Syriza party, was handed the mandate to form a new government. He has vowed to nationalize banks and rip up the terms of the nation’s bailout, raising doubt about the future of the monetary union.

Europe-Linked Stocks

Companies that do business in Europe fell as the euro extended losses against the yen. Mitsubishi Motors slid 2.3 percent to 85 yen. Canon Inc., a camera maker that gets 31 percent of its sales in Europe, lost 1.7 percent to 3,485 yen.

Stocks also declined on negative earnings reports. NTT Data forecast net income will rise 25 percent to 38 billion yen ($476 million) in the year ending March 2013, missing analysts’ estimate of a 47.3 billion yen gain. The stock fell 12 percent to 242,400 yen.

Namco Bandai Holdings Inc., an operator of arcades and theme parks, slid 2.7 percent to 1,028 yen after it projected a 9.3 percent drop in profit for the year ending March 31.

Among stocks that rose, Ajinomoto advanced 7.4 percent to 1,120 yen, the biggest rise on the Nikkei 225. The company said it will spend as much as 50 billion yen to buy back up to 7.4 percent of its outstanding shares through Jan. 21. It also forecast net income will rise 5.4 percent to 44 billion yen.

Stocks on the Topix were valued at 0.93 times book value, compared with 2.17 for the S&P 500 and 1.38 for the Stoxx Europe 600 Index. A value less than one means investors can buy companies for less than the value of their assets.

The Nikkei 225 Volatility Index fell 3.9 percent to 20.59, indicating traders expect a swing of about 5.9 percent on the benchmark gauge over the next 30 days.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editor responsible for this story: John McCluskey at j.mccluskey@bloomberg.net

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