Japan Stocks Fall Amid Low Volume on Yen; Mothers Tumbles

Japanese stocks fell amid low volume, with the Topix index retreating for a third day, as the yen rose and investors weighed comments by China’s central bank about stabilizing the nation’s money markets.

Daikin Industries Ltd., an air-conditioner maker that gets 18 percent of revenue in China, retreated 1 percent after yesterday capping its biggest two-day loss since March 2011. PeptiDream Inc. plummeted 28 percent on the Tokyo Stock Exchange Mothers market of smaller companies after canceling a research pact with Pfizer Inc. Shipping lines fell the most among the 33 Topix industry groups.

The Topix dropped 0.9 percent to 1,069.28 at the close in Tokyo, with volume about 40 percent below the 30-day average. About six stocks fell for each that rose. Only five industry groups advanced, led by airlines. The Nikkei 225 Stock Average slid 1 percent to 12,834.01. The TSE Mothers Index plunged 12 percent to 620.46, its lowest since April 5 and its second-biggest fall this year.

“Japanese stocks are pretty vulnerable to what’s happening in China because the nations are interconnected,” said Masaru Hamasaki, a senior strategist at Tokyo-based Sumitomo Mitsui Asset Management Co., which oversees about $115 billion. “We’re talking about China’s financial system. No wonder the market is nervous.”

Market Volatility

The Topix fell about 16 percent from an almost five-year high on May 22, paring this year’s gain to 24 percent. The measure traded at 13.5 times average estimated earnings, compared with 14.4 for the Standard & Poor’s 500 Index and 12.4 for the Stoxx Europe 600 Index.

Japan’s broader gauge has swung an average of about 3.1 percent daily since May 22. The Topix’s 30-day historic volatility was at 40.32 today, near its highest level since the 2011 earthquake and tsunami.

Shipping lines fell as the yen rose against 14 of its 16 major counterparts. Nippon Yusen K.K., Japan’s biggest line by sales, lost 2.3 percent to 254 yen. Mitsui O.S.K. Lines Ltd., ranked No. 2, fell 3.9 percent to 370 yen. Kawasaki Kisen Kaisha Ltd., the third-largest, dropped 4 percent to 191 yen.

Futures on the S&P 500 fell 0.1 percent. The gauge added 1 percent yesterday, as durable-goods orders rose more than expected and U.S. home sales advanced to the highest in almost five years. Consumer confidence climbed.

The Shanghai Composite Index, which tracks the largest of mainland China’s share markets, fell as much as 1.9 percent before paring losses. The People’s Bank of China said it has provided liquidity to some financial institutions to stabilize money-market rates and will use short-term liquidity operations and standing lending-facility tools to ensure steady markets.

China Exporters

Companies that do business in China fell today. Daikin, which counts Asia’s largest economy as its No. 1 overseas market, declined 1 percent to 3,790 yen. Fanuc Corp., which supplies robotics to Chinese factories, slid 1.6 percent to 13,800 yen. Hitachi Construction Machinery Co., which gets 12 percent of sales in China, declined 2.1 percent to 1,903 yen.

PeptiDream, which soared 268 percent the day after listing on the Mothers market on June 11, dropped 28 percent to 7,740 yen. The biopharmaceutical company that specializes in peptide technology said yesterday it exited a 2010 cooperation agreement with Pfizer at the U.S. drugmaker’s request.

“The news about PeptiDream is overwhelmingly adding to pressure on the Mothers market,” said Yoshihisa Okamoto, head of equity research at Mizuho Asset Management Co. “It’s making investors lose confidence in start-up companies. Anxiety is breeding anxiety.”

Among stocks that gained, KLab Inc. rose 9.6 percent to 1,065 yen after surging to its daily limit yesterday on a report Microsoft Corp. will partner with the social-game maker to bring its titles to smartphones.

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