Japan’s Topix index fell, halting a two-day gain, as paper companies and consumer lenders declined and the yen strengthened.
Daio Paper Corp., Japan’s third-biggest paper company by market value, slid 4.5 percent. Consumer lender Aiful Corp. slumped 3.9 percent. Chubu Electric Power Co. lost 1.4 percent after Citigroup Inc. downgraded the utility. Mitsubishi UFJ Financial Group Inc., Japan’s biggest lender, added 1.2 percent after Bank of America Corp.’s Merrill Lynch unit rated the shares a buy.
The Topix fell 0.5 percent to 1,228.73 at the close in Tokyo after rising as much as 0.5 percent. The Nikkei 225 Stock Average lost 0.9 percent to 14,994.80. The yen gained 0.2 percent to 102.30 per dollar after weakening the past two days.
“Japanese stocks are taking a pause after rising fast recently,” said Ichiro Yamada, general manager of equities at Fukoku Mutual Life Insurance Co. “Stocks will struggle unless the yen extends losses further. That’s the only factor of concern for the market right now.”
The Topix climbed 6.8 percent from a recent low on May 21 amid optimism about the global economy. The gauge is still the worst performer among 24 developed markets tracked by Bloomberg. The measure capped a world-beating rally last year as the Bank of Japan pressed ahead with its record monetary easing. The central bank is scheduled to meet June 12-13.
Thirty-three percent of economists in a Bloomberg News survey forecast the BOJ will expand monetary stimulus at the end of October. Nine percent of respondents see more easing in July, down from 38 percent in a survey last month.
“The BOJ will add to easing eventually,” said Masaaki Yamaguchi, equity market strategist at Nomura Holdings Inc. “The bank has put off action because it doesn’t think the economy is bad. That means the economy is getting better and won’t be a negative for the market.”
The Topix Pulp & Paper Index declined 2.2 percent, the most since May 16. Daio Paper fell 4.5 percent to 975 yen. Oji Holdings Corp. slid 3.2 percent to 425 yen, leading the Nikkei 225 lower.
Consumer lenders dropped with Aiful losing 3.9 percent to 463 yen. Acom Co. declined 3.2 percent to 397 yen.
Chubu Electric lost 1.4 percent to 1,221 yen after the utility’s was cut to neutral from buy at Citigroup.
Mitsubishi UFJ added 1.2 percent to 602 yen after its rating was raised to buy from neutral at Merrill, which raised its price target to 810 yen from 710 yen. Megabanks should see an improved environment from the middle of the current fiscal year, analyst Nana Otsuki wrote in a report.
Futures on the Standard & Poor’s 500 Index slipped 0.1 percent. The equity measure yesterday capped its seventh record close in the past eight sessions, as small-cap shares rallied and Family Dollar Stores Inc. advanced with Analog Devices Inc. amid deals activity. The Dow Jones Industrial Average gained 0.1 percent to an all-time high.
The Topix traded at 1.2 times book value today, compared with 2.72 for the S&P 500 and 1.92 for the Stoxx Europe 600 Index yesterday.