Japanese Stocks Fall for Second Day as Yen Gains After U.S. Data

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Japanese stocks fell as investors took profits and weak U.S. economic data sent the dollar lower against the yen, damping the earnings outlook for exporters.

Chemical maker Nitto Denko Corp., which gets more than 70 percent of sales abroad, dropped 2.8 percent. Rubber product-makers led losses, falling a second day as investors took profit in one of the best-performing groups over the past few weeks. Iida Group Holdings Co. slumped 6.3 percent after a person familiar with the matter said the construction company was preparing to issue convertible debt. Nisshin Seifun Group Inc. jumped 5 percent after Nomura Holdings Inc. upgraded its rating on the flour producer.

The Topix index dropped 0.3 percent to 1,669.99 at the close in Tokyo, falling for a second day after a 12-day rally. The Nikkei 225 Stock Average lost 0.3 percent to 20,473.51. The yen traded at 123.97 per dollar after strengthening 0.5 percent on Tuesday to snap seven days of declines that had pushed the Japanese currency to the lowest level since 2002. Disappointing U.S. factory data coupled with signs of progress over Greece’s debt crisis, which sent the euro soaring, compounded losses yesterday for the greenback.

“After the 12-day rally, we’re in profit-taking territory,” said Tomomi Yamashita, a fund manager in Tokyo at Shinkin Asset Management, which oversees the equivalent of $6.3 billion. “The market might be content after the dollar-yen hit 125 yesterday. And now that it’s dropped a full yen from there, it might be hard to recover until investors begin believing we’re heading back to above 125.”

Official data released Tuesday showed U.S. factory orders in April fell 0.4 percent, compared with the 0.1 percent drop estimated by economists. It was the eighth contraction in nine months.

Weak Dollar

The euro surged the most in 10 weeks against the dollar. Greece’s creditors were said to be wrapping up a plan to break a deadlock for the disbursement of additional funds, ending months of acrimonious negotiations with creditors and lessening the threat of default.

The weaker greenback hurt exporters, including Nitto Denko, which dropped 2.8 percent. Fuji Heavy Industries Ltd., which gets 60 percent of sales from North America, lost 1.3 percent.

Rubber-product makers, one of the best performers over the 12-day rally, fell a second day. Sumitomo Rubber Industries Ltd. declined 1.3 percent, while Bridgestone Corp. retreated 1.9 percent.

Iida Group plummeted 6.3 percent. A person familiar with the matter said the construction firm would sell 30 billion yen of convertible bonds to foreign investors, pricing the securities at a 25-35 percent premium.

Nisshin Seifun soared 5 percent after Nomura lifted its rating to buy from neutral, citing improving overseas sales and a management shift toward better profitability and shareholder returns.

E-mini futures on the Standard & Poor’s 500 Index rose 0.2 percent after the underlying measure slipped 0.1 percent on Tuesday in New York.

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