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Japan Stocks Fall as Yen Rises Amid Ukraine, Gaza Tension

July 18 (Bloomberg) -- Japanese stocks fell, with the Topix index paring its weekly advance, as the yen held gains after a Malaysian Airlines passenger jet was shot down over Ukraine and Israel sent troops into Gaza.

Mazda Motor Corp., an automaker that gets 66 percent of its revenue overseas, slid 1.4 percent. Sharp Corp. lost 2.1 percent on a report its quarterly net loss will exceed 10 billion yen ($99 million). Energy explorer Inpex Corp. gained 1.6 percent as oil rose amid geopolitical tensions.

The Topix declined 0.8 percent to close at 1,263.29 in Tokyo, trimming its weekly increase to 0.7 percent. All but two of its 33 industry groups dropped today. The Nikkei 225 Stock Average declined 1 percent to 15,215.71. The yen fell 0.1 percent to 101.31 per dollar after surging 0.5 percent yesterday.

“Investors have yet to estimate the implications” of the plane crash,’’ said Yusuke Kuwayama, a portfolio manager at Tokio Marine & Nichido Fire Insurance Co. in Tokyo. “Normally, geopolitical risks give you an opportunity to buy back because shares tend to rebound. But you have to wait for now as the crash just happened and it’s hard to grasp the situation.”

Futures on the Standard & Poor’s 500 Index fell 0.1 percent today. The equity measure sank 1.2 percent yesterday. The Malaysian Airlines jet en route to Kuala Lumpur was shot down over eastern Ukraine, killing all 298 people on board. The government in Kiev blamed pro-Russian rebels, while the separatists deny the accusation.

Israel, Gaza

Israel moved troops and tanks into Hamas-controlled Gaza behind heavy artillery shelling, the first significant Israeli ground operation in the area since 2009. The invasion comes after Palestinians launched rocket attacks on Israel and Israeli aerial sorties killed more than 200 Gaza residents.

Exporters fell after the yen gained yesterday. Mazda lost 1.4 percent to 488 yen and Panasonic Corp., a maker of consumer electronics that gets about a half of its revenue abroad, declined 1.2 percent to 1,193 yen.

Sharp slid 2.1 percent to 321 yen after the Kyodo news reported on the company’s net loss for the quarter ended June without saying where it got the information.

Energy explorers rose as West Texas Intermediate and Brent crude headed for the first weekly gain in a month. Inpex gained 1.6 percent to 1,569 yen and Japan Drilling Co. added 0.3 percent to 4,970 yen.

Rating Cut

Yamaha Corp., a maker of musical instruments, fell the most on the Nikkei 225 after its rating was cut to underperform from neutral at SMBC Nikko Securities Inc. The stock declined 3.8 percent to 1,541 yen.

Yaskawa Electric Corp., a maker of industrial robots, gained 4.4 percent to 1,384 yen after it reported that its quarterly net income jumped 33 percent to 4.5 billion yen from a year earlier. Goldman Sachs Group Inc. raised the stock’s price target to 1,500 yen from 1,440 yen.

The Nikkei Stock Average Volatility Index closed 9.9 percent higher today, the most since March 14. The Topix traded at 1.2 times book value today, compared with 2.7 for the S&P 500 and 1.9 for the Stoxx Europe 600 Index yesterday.

The Topix had rebounded 9.8 percent from a May 21 low on signs the economy is weathering an April sales-tax increase and amid optimism Japan’s 126.6 trillion yen pension fund will buy more domestic stocks.

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

To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net Jim McDonald, Tom Redmond

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