Japan Stocks Fall After Nation Swings to Trade Deficit

Japanese stocks declined, with the Nikkei 225 Stock Average falling the most in almost two weeks, on a wider-than-expected trade deficit in July as Europe’s debt crisis and a strong yen damped demand. Trade volume was low ahead of euro-area meetings this week to discuss a Greek bailout.

Canon Inc., a camera maker that depends on Europe for almost a third of its sales, lost 1.1 percent. JFE Holdings Inc. paced declines among steelmakers after iron-ore prices fell to a 32-month low amid falling demand from China. Advantest Corp., the world’s biggest maker of memory-chip testers, lost 1.7 percent after bellwether Dell Inc. cut its profit outlook amid a global slump in personal-computer sales.

“Japan has been struggling to regain export momentum as the global economy cools,” said Junko Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo and a former central bank official. “The trade deficit is likely to remain for the time being.”

The Nikkei 225 fell 0.3 percent to 9,131.74 at the 3 p.m. close in Tokyo, the biggest decline since Aug. 10. Volume on the gauge was almost 30 percent below the 30-day average as investors await developments from euro-zone finance ministers’ meetings. The broader Topix Index lost 0.3 percent to 762.73, with about twice as many shares declining as advancing.

The Topix fell 13 percent from this year’s peak on March 27 on concern earnings will be hurt by Europe’s debt crisis and slowing growth in China and the U.S. Volume yesterday was the second lowest for the year.

Shares on the gauge trade at 0.9 times book value, compared with 2.2 for the Standard & Poor’s 500 Index and 1.4 for the Europe Stoxx 600 Index. A number less than one means companies can be bought for less than the value of their assets.

Japan Trade

Stocks fell as Japan’s trade deficit widened to 517.4 billion yen ($6.5 billion) in July as Europe’s sovereign-debt crisis and a slowdown in China dragged down exports, data released by the Finance Ministry showed. That compares with a revised 60.3 billion yen surplus in June and the median forecast of a 270 billion yen deficit in a Bloomberg News survey of 28 analysts.

The yen strengthened to as high as 79.17 against the dollar today in Tokyo, compared with 79.29 at the close of stock trading yesterday, cutting overseas income at Japanese companies when repatriated.

French President Francois Hollande is due in Berlin tomorrow to discuss the crisis with German Chancellor Angela Merkel. The European Central Bank is working on plans to buy bonds while a senior lawmaker with Merkel’s government said yesterday that concessions are possible for Greece.

‘Political Issue’

“If there’s progress to be made in Europe, it will require concessions from Germany. But it’s hard to see it because it’s a political issue,” said Hiroshi Fujimoto, a fund manager at Tokyo-based Shinkin Asset Management Co., which oversees the equivalent of $6.6 billion.

Companies linked to Europe declined. Canon, the world’s biggest camera maker, fell 1.1 percent to 2,701 yen. Ricoh Co., an office-equipment maker that gets more than 20 percent of its revenue in the region, slipped 1.5 percent to 642 yen.

Steelmakers declined after iron-ore prices dropped for a fourth day to the lowest since December 2009 as slowing growth curbs demand in China, the biggest market for the resource. JFE Holdings sank 2.8 percent to 1,103 yen. Nippon Steel Corp. fell 1.7 percent to 172 yen.

“China’s government is focusing more on damping property prices rather than stepping up stimulus measures,” said Shinkin Asset Management’s Fujimoto.

Futures on the Standard & Poor’s 500 Index slid 0.3 percent today. The gauge fell 0.4 percent yesterday amid a slump in technology shares.

PC Slump

Chip-related stocks fell after Dell forecast third-quarter revenue that missed estimates. The personal-computer maker also cut its full-year profit outlook as competition from tablets and an anemic global economic recovery drags on demand.

Advantest fell 1.7 percent to 1,139 yen. Tokyo Electron Ltd., the world’s second-biggest maker of semiconductor production equipment, slipped 2.8 percent to 3,840 yen.

Papermakers declined the most among the Topix’s 33 industry groups after Bank of America Merrill Lynch said the industry’s fundamentals are further deteriorating.

Nippon Paper Group Inc. sank 3.8 percent to 1,063 yen. Oji Paper Co. declined 3.7 percent to 261 yen.

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