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Japan Stocks Fall as U.S. Manufacturing, Hiring Slows

May 2 (Bloomberg) -- Japanese stocks fell, with the Topix Index capping the first back-to-back decline in two weeks, after reports showed U.S. manufacturing and hiring slowed, weighing on the earnings outlook for exporters in the Asian nation.

Komatsu Ltd., a construction machinery maker that gets 30 percent of its sales in the Americas, dropped 4.1 percent. JFE Holdings Inc., Japan’s second biggest steelmaker by market value, declined 4.8 percent after its rating was cut at JPMorgan Chase & Co. Takeda Pharmaceutical Co. added 2.3 percent after a judge threw out a $6.5 million jury verdict against Asia’s biggest drugmaker over its Actos diabetes treatment.

The Topix slid 0.4 percent to close at 1,153.28 in Tokyo with about nine stocks dropping for every seven that rose. The gauge capped the first two-day drop since April 16. The Nikkei 225 Stock Average dropped 0.8 percent to 13,694.04. The ADP Research Institute said companies added the fewest jobs in seven months ahead of a government jobs report tomorrow.

“ADP data added to concern that U.S. jobs data may be weak this time,” said Takahiro Nakano, a Tokyo-based senior strategist at Mizuho Trust & Banking Co., a unit of Japan’s third-largest bank by market value. “Japanese stocks have traded at high levels like U.S. equities, and they are vulnerable to profit taking when confidence gets shaky about the economic recovery.”

Golden Week

Japanese markets will be closed tomorrow and on May 6 during the so-called Golden Week, a string of springtime holidays. The Topix last month capped its biggest monthly rally since March 1999 as Prime Minister Shinzo Abe and central bank Governor Haruhiko Kuroda pledged to defeat 15 years of deflation.

The gauge traded at 17 times estimated earnings yesterday, compared with 14.4 for the Standard & Poor’s 500 Index and 12.9 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

BOJ members agreed the Japanese economy has bottomed and is showing some signs of rebounding, according to minutes from the April 3-4 meeting released today. The central bank at that meeting said it will double the monetary base, or the amount of money circulating in the economy, in two years by buying more government debt.

Of the 270 companies on the 1,711-member Topix that have reported annual earnings since April 1, and for which Bloomberg has estimates, 156 beat projections.

Futures of the S&P 500 index rose 0.3 percent today. The measure fell 0.9 percent yesterday, when the Institute for Supply Management’s factory index fell to 50.7 in April from 51.3 in March, while the Federal Reserve said it will maintain its bond buying to support the economy.

U.S. Jobs

Separately, ADP reported payrolls expanded by 119,000, the least since September, while the median forecast of economists surveyed by Bloomberg projected a 150,000 advance. The Labor Department publishes its jobs and unemployment report tomorrow.

Exporters to the U.S. dropped. Komatsu declined 4.1 percent to 2,507 yen, and Kyocera Corp., a maker of solar panels that gets about 17 percent of its revenue in the U.S., slid 1.4 percent to 9,640 yen. Toshiba Corp., a power equipment maker that gets 18 percent of its sales in North America, lost 1.2 percent to 517 yen.

JFE Holdings fell 4.8 percent to 1,985 yen, pacing losses among steelmakers, after its rating was downgraded to neutral from overweight at JPMorgan. The share fell the most since Feb. 5. Nippon Steel & Sumitomo Metal Corp., Japan’s biggest steelmaker, dropped 3.5 percent to 248 yen.

Takeda rose 2.3 percent to 5,340 yen after Judge Kenneth Freeman in state court in Los Angeles ruled Jack Cooper’s attorneys weren’t able to properly link the former telephone-company worker’s bladder cancer to his Actos use.

Sharp Corp. rose 5 percent to 337 yen as lenders consider an additional 100 billion yen of financing for the unprofitable Japanese TV maker, according to a person familiar with the matter. The stock fell 5 percent yesterday.

The Nikkei Stock Average Volatility Index added 3.1 percent to 24.20, indicating traders expect a swing of about 6.9 percent on the benchmark gauge during the next 30 days. Trading volume on the Nikkei was about 31 percent below the 30-day average.

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

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.

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