Nikkei 225 Erases Loss as Yen Slides; Mining Shares Drop

Japanese stocks fell, with the Nikkei 225 Stock Average capping the longest losing streak in three months, after commodities slumped amid concern global economic growth is slowing. Shares pared losses as a slide in the yen buoyed exporters.

Sumitomo Metal Mining Co. lost 4.8 percent after gold capped the biggest drop in three decades. Mazda Motor Corp., the Japanese automaker with the highest proportion of exports, erased an earlier 3.3 percent drop as the yen weakened against all its major peers. Softbank Corp. slumped 6.8 percent after Dish Network Corp. outbid the carrier for Sprint Nextel Corp. Kansai Electric Power Co. slid 5 percent after CLSA Asia-Pacific Markets recommended selling the utility.

The Nikkei 225 fell 0.4 percent to close at 13,221.44 in Tokyo after falling as much as 2 percent. The gauge dropped for a third consecutive day, the longest losing streak since Jan. 23, after climbing to an almost five-year high last week. The broader Topix Index fell 1.3 percent to 1,119.20, with more than three shares sliding for each that gained, as economic data from China and the U.S. missed estimates.

“All of a sudden, the market has switched to a risk-off mode,” said Hitoshi Asaoka, a Tokyo-based senior strategist at Mizuho Trust & Banking Co., a unit of Japan’s third-largest bank by market value. “Investors should take a cautious approach to Japanese stocks, but some are probably looking to buy on dips because of expectations about Bank of Japan policy.”

Topix Rally

The Topix surged has 55 percent from mid-November, gaining the most among major indexes, as the yen fell amid pledges from Prime Minister Shinzo Abe and Bank of Japan Governor Haruhiko Kuroda to beat deflation. The gauge traded at 16.9 times average estimated earnings, compared with 14 for the Standard & Poor’s 500 Index and 12.5 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Futures on the S&P 500 Index added 0.7 percent. The measure fell 2.3 percent yesterday, the biggest decline since November, after data showed China’s economy grew at a slower pace than expected in the last quarter and manufacturing in the New York region expanded less than projected in April.

U.S. stocks extended losses as explosions rocked the finish line area of the Boston Marathon, killing at least three people and injuring scores.

The Standard & Poor’s GSCI Spot Index of 24 raw materials fell 2.3 percent to 608.83, the lowest settlement since July 10. West Texas Intermediate oil fell below $88 a barrel for the first time this year and gold had its biggest one-day drop since 1983. Silver reached the lowest level in more than two years.

Miners, Traders

Sumitomo Metal Mining dropped 4.8 percent to 1,240 yen. Inpex Corp., Japan’s No. 1 energy explorer, lost 3 percent to 482,500 yen. Mitsubishi Corp., Japan’s biggest trading house, lost 2.4 percent to 1,744 yen. Mitsui & Co., the No. 2, slid 3.6 percent to 1,318 yen.

The Nikkei 225 briefly erased losses as the yen weakened from its strongest level since April 5. Japan’s currency has fallen 20 percent in the past six months, the biggest decliner among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes.

“Investors are quick to buy Japanese shares when the yen weakens because the market has risen along with the currency’s drop,” said Yuya Tsuchida, a strategist at Toyo Securities Co. in Tokyo. “It’s hard to imagine the yen’s downtrend will end when you think about the difference between monetary easing in the U.S. and Japan.”

Mazda closed unchanged at 304 yen after dropping as much as 3.3 percent. Toyota Motor Corp., the world’s largest carmaker, lost 1.6 percent to 5,450 yen after declining as much as 2.9 percent. Honda Motor Co., Japan’s second largest carmaker by market value, fell 1.7 percent to 3,820 yen, paring an earlier 3.5 percent drop.

Softbank Falls

Softbank, Japan’s third largest mobile phone company, declined 6.8 percent to 4,365 yen, the biggest drop since Oct. 12, after Dish Network offered $25.5 billion for control of Sprint Nextel, sparking concerns Softbank may raise its own bid.

Dish’s unsolicited offer, announced yesterday, exceeds the $20 billion Softbank agreed to pay in October for a 70 percent stake in Sprint, the No. 3 U.S. wireless carrier.

Kansai Electric, Japan’s second biggest utility by revenue, paced losses among power companies after its rating was cut to sell from buy at CLSA, which citied a possible delay in reactor restarts. Kansai dropped 5 percent to 1,300 yen after surging 16 percent yesterday. Chubu Electric Power Co., Japan’s third biggest utility by revenue, fell 4.2 percent to 1,362 yen.

The Nikkei Stock Average Volatility Index added 0.9 percent to 28.15, indicating traders expect a swing of about 8.1 percent on the benchmark gauge over the next 30 days.