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Japan Stocks Fall on Fed Concern; Loss Pared on China PMI

Japan’s Topix Erases Losses as China Manufacturing Increases
A pedestrian walks past the Tokyo Stock Exchange in Tokyo. Photographer: Tomohiro Ohsumi/Bloomberg

Japanese stocks fell for a third day after minutes of the Federal Reserve’s meeting showed support for stimulus tapering. Losses were limited as China’s manufacturing data beat estimates.

Mazda Motor Corp., an automaker that gets 30 percent of its sales in North America, slid 2.3 percent. Daikin Industries Ltd., an air-conditioner maker that gets 18 percent of revenue in China, rose 0.9 percent after falling as much as 1.7 percent. Tokyo Electric Power Co., owner of the crippled Fukushima Dai-Ichi nuclear power plant, fell 4.1 percent, extending yesterday’s 9.3 percent drop, as it said it needs overseas expertise to help contain radioactive water leaks.

The Topix index dropped 0.2 percent to 1,119.56 at the close in Tokyo after swinging between gains and losses. The gauge slumped as much as 0.9 percent in early trading before data showed a Chinese manufacturing index unexpectedly expanded in August from an 11-month low. The Nikkei 225 Stock Average lost 0.4 percent to 13,365.17.

The data from China “is easing a risk-off sentiment, which has been persistent recently,” said Kenji Shiomura, a Tokyo-based senior strategist at Daiwa Securities Group Inc., Japan’s second largest brokerage. “The focus has been on capital outflows out of Asia and slower growth in emerging markets due to the Fed’s tapering.”

The preliminary reading of 50.1 for a China Purchasing Managers’ Index released today by HSBC Holdings Plc and Markit Economics compares with a final figure of 47.7 in July, and was higher than all 16 estimates in a Bloomberg News survey.

Fed Minutes

Futures on the Standard & Poor’s 500 Index rose 0.1 percent today after the measure fell 0.6 percent yesterday for its fifth decline in six trading days. The Federal Open Market Committee’s minutes from the July 30-31 gathering showed officials were “broadly comfortable” with Chairman Ben S. Bernanke’s plan to start reducing bond buying later this year, with a few saying tapering might be needed soon.

“The market tends to be nervous every time monetary policy changes,” said Masaru Hamasaki, a senior strategist at Tokyo-based Sumitomo Mitsui Asset Management Co., which manages about 11.2 trillion yen ($114 billion) in assets. “The uncertainty over that transition is pulling money out of risk assets.”

Companies that do business in the U.S. fell, with Mazda falling 2.3 percent to 390 yen. Canon Inc., a camera maker that gets 27 percent of its revenue in the Americas, dropped 1.2 percent to 2,988 yen.

China Manufacturing

Shares pared losses after the release of China’s manufacturing data. Daikin advanced 0.9 percent to 4,660 yen. Hitachi Construction Machinery Co, a machinery maker that depends on China for 12 percent of its sales, fell 1 percent to 1,922 yen after sliding as much as 2.5 percent.

Japanese shares have led gains among developed markets this year amid optimism that record stimulus by the Bank of Japan and Prime Minister Shinzo Abe’s economic reforms will boost growth. Their performance has lagged in the past three months, with the Topix dropping about 12 percent from its May 22 close, which was the highest since 2008.

Foreign investors bought a net 47.9 billion yen of Japanese stocks last week after recording net sales for three consecutive weeks, according to figures released today by the Finance Ministry.

Tokyo Electric, known as Tepco, declined 4.1 percent to 534 yen, the lowest since July 1, after Zengo Aizawa, a vice president, yesterday called for overseas help to contain the disaster at the Fukushima plant.

Sharp Corp. rose as much as 2.5 percent as the unprofitable TV maker plans to delay a plan to raise about 100 billion yen from public and private share sales, according to two people with knowledge of the matter. It closed at 397 yen, a 0.8 decline from yesterday.

The Topix traded at 1.17 times book value today, compared with 2.41 for the S&P 500 and 1.69 for the Stoxx Europe 600 Index yesterday.

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