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Japan Stocks Decline After IMF Cuts Global Growth Outlook

 Japanese shares fell after the market opened after a public holiday, with the Nikkei 225 Stock Average dropping the most in almost two weeks, after the International Monetary Fund cut its global growth outlook.

Komatsu Ltd., a construction-machinery maker that gets 80 percent of its sales overseas, dropped 3.4 percent. Honda Motor Co. paced losses among automakers on a report it plans to cut Chinese production along with Toyota Motor Corp. and Nissan Motor Co. Sharp Corp. fell to the lowest since 1974 after its equity rating was cut by Goldman Sachs Group Inc. CellSeed Inc., which develops regenerative medicine, added 4.4 percent after a Japanese professor won the Nobel Prize for stem-cell research.

The Nikkei 225 dropped 1.1 percent to 8,769.59 as of the trading close in Tokyo, the biggest decline since Sept. 26. The broader Topix Index retreated 1.3 percent to 727.68, with 29 of the gauge’s 33 industry groups falling. Shares also fell after a report showed growth of Japan’s current account surplus slowed in August.

“At the start of this year, hope was that Japan would be the best among developed nations, but pessimism began to take over toward summer,” said Koji Toda, chief fund manager at Resona Bank Ltd. in Tokyo, which oversees about 15 trillion yen ($191 billion). “Japanese stocks can’t keep up with gains in U.S. and European equities on policy expectations. Plus, demand concern in China is dealing the latest blow.”

Topix Valuations

The Topix has risen 1.2 percent this year through last week as a wave of stimulus measures was introduced in Asia, the U.S. and Europe to fight the global slowdown in growth. Shares on the gauge trade at about 0.88 times book value, compared with 2.25 for the Standard & Poor’s 500 Index and 1.51 times for the Stoxx Europe 600 Index. A number lower than one means a company can be bought for less than the value of its assets.

The IMF said today the world economy will expand 3.3 percent this year, the slowest pace since the 2009 recession, and 3.6 percent next year. That compares with July projections of 3.5 percent growth in 2012 and 3.9 percent for 2013. The Washington-based global lender now sees “alarmingly high” risks of a steeper slowdown. The IMF’s 188 member countries are meeting in Tokyo this week.

“Asia is of course a world major trader and major exporter, and it’s suffering from not only a slowdown in China, but also across all of Europe,” said Matthew Sherwood, Sydney-based head of markets research for Perpetual Investments, which oversees about $25 billion. “We are looking at balance-sheet risks in each individual company because we are in a capital-constrained world. Therefore, companies that can fund their own balance sheets are in a very strong relative position.”

Komatsu, Panasonic

Exporters fell, with Komatsu dropping 3.4 percent to 1,494 yen. Panasonic Corp., an electronics company that generates about 47 percent of its sales outside Japan, slid 3.5 percent to 496 yen.

Companies on the Nikkei 225 for which geographic revenue data are available get 31 percent of their sales outside Japan, according to data compiled by Bloomberg.

Carmakers fell after the Nikkei newspaper reported Japan’s three largest automakers plan to halve production in China as a territorial dispute continues to damp demand for Japanese goods.

Honda lost 2.5 percent to 2,361 yen. Toyota slid 1.5 percent to 3,000 yen, while Nissan declined 1.9 percent to 656 yen.

Sharp slumped 15 percent to 151 yen, the lowest in at least 38 years. The company’s rating was cut to sell/neutral and its target price lowered to 120 yen by Goldman Sachs, which said the electronics maker may have to issue new stock to raise funds.

Futures on the S&P 500 added 0.2 percent today after the index dropped 0.4 percent in New York yesterday, with Apple Inc. pacing declines among technology stocks.

Among stocks that rose, CellSeed jumped 4.4 percent to 788 yen after stem cells derived from a mouse’s skin won a Nobel Prize for Kyoto University professor Shinya Yamanaka, 50. Japan Tissue Engineering Co., a biotechnology company, jumped 7.2 percent to 70,200 yen.

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