Jan. 23 (Bloomberg) -- Japanese shares fell, with the Topix index erasing earlier gains, as data showed China’s manufacturing unexpectedly contracted, countering an advance by electronics shares including NEC Corp. and Nidec Corp.
All 33 Topix industry groups retreated. The Topix Machinery Index erased gains to drop 0.8 percent after the Chinese data. Mobile-phone company SoftBank Corp. sank 3.5 percent to close at a seven-week low. NEC jumped the most on the Nikkei 225 Stock Average after Citigroup Inc. raised its rating on the computer maker. Nidec increased 5.6 percent after the precision-motor manufacturer boosted its full-year profit forecast and announced a share buyback.
The Topix slid 0.9 percent to 1,287.52 at the close of trading in Tokyo, reversing gains of as much as 0.6 percent. The Nikkei 225 lost 0.8 percent to 15,695.89. Stocks fell after a private report showed China’s manufacturing contracted and International Monetary Fund Deputy Managing Director Naoyuki Shinohara said Japan doesn’t need more monetary easing.
“While the expectations for China’s economy weren’t great, the purchasing managers’ index doesn’t often fall below 50,” said Takashi Aoki, who helps oversee the equivalent of $37.6 billion in Tokyo at Mizuho Asset Management Co. “If China’s economy is weak, naturally it affects Japan.”
The China manufacturing gauge dropped to 49.6 in January from 50.5 the previous month, HSBC Holdings Plc and Markit Economics said today. Strategists had estimated a reading of 50.3, according to the median estimate in a Bloomberg survey. A figure under 50 indicates contraction.
The Topix Machinery Index slid 0.8 percent, reversing a gain of 0.5 percent. Komatsu Ltd., which gets 8.3 percent of sales from China, fell 0.5 percent to 2,140 yen. Mitsubishi Heavy Industries Ltd. lost 0.4 percent to 706 yen.
Futures on the Standard & Poor’s 500 Index sank 0.3 percent. Most U.S. stocks rose yesterday as investors assessed earnings from companies including Norfolk Southern Corp., Coach Inc., International Business Machines Corp.
Among other declines, the Topix Metal Products Index slid 2 percent for the biggest drop among the broader gauge’s industry groups. SoftBank tumbled 3.5 percent to 8,539 yen, its lowest close since Dec. 4.
The Topix jumped 51 percent in 2013, its third-biggest yearly gain on record, as Prime Minister Shinzo Abe and the central bank took steps to end 15 years of deflation. Strategists surveyed by Bloomberg expect the gauge will climb to 1,470 by the end of 2014 as the yen weakens amid prospects for further stimulus by the BOJ while the Federal Reserve cuts back.
Japan’s central bank stuck to its pledge to expand the monetary base by an annual 60 trillion to 70 trillion yen yesterday after a two-day meeting in Tokyo, in line with the forecasts of all 36 economists surveyed by Bloomberg News.
The BOJ is moving smoothly toward achieving its price target, Governor Haruhiko Kuroda said yesterday after the policy meeting in Tokyo. Japan’s economy will continue recovering even after the sales-tax increase in April, he said.
“As long as steady progress is being made toward the 2 percent target, we do not see a need for additional monetary accommodation” in Japan, the IMF’s Shinohara said.
Among shares that rose, NEC jumped 5.2 percent to 286 yen, the most on the Nikkei 225. Citi upgraded its shares to buy from neutral.
Nidec jumped 5.6 percent to 11,715 yen, a record high. The company raised its full-year net income forecast by 1.8 percent to 56 billion yen and said it will spend as much as 24 billion yen to buy back shares.
The Topix traded at 1.31 times book value today, compared with 2.65 for the S&P 500 yesterday. Volume on the Japanese gauge was 11 percent above the 30-day average today.
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