Japan Shares Retreat as Economic Growth Trails Estimates

Japanese shares fell, with the Topix index dropping for the first time in five days, as data showed the economy expanded less than initially estimated and oil producers declined.

JX Holdings Inc. dropped 1.6 percent after crude prices slid. Mitsubishi Heavy Industries Ltd. sank 0.9 percent after Boeing Co. said a change in the production process at the Japanese manufacturer may have caused hairline cracks in the wings of some 787 Dreamliners still in assembly. Daiichi Sankyo Co. slipped 1.6 percent after Indian unit Ranbaxy Laboratories Ltd. recalled a generic cholesterol-lowering drug. Shimizu Corp. jumped 2.9 percent after Citigroup Inc. raised its outlook on the building sector.

The Topix slid 0.8 percent to 1,227.61 at the close of trading in Tokyo, with all but four of its 33 industry groups retreating. The Nikkei 225 Stock Average dropped 1 percent to 15,120.14. The yen rose 0.2 percent to 103.08 against the dollar after falling for four days.

“Japanese data was slightly weaker than forecast, which is negative for sentiment,” said Andrew Sullivan, director of sales trading at Kim Eng Securities in Hong Kong. “The data is likely to add to further pressure on Prime Minister Shinzo Abe to deliver.”

Japan’s economy expanded less than expected in the fourth quarter and the current-account deficit widened to a record in January. Gross domestic product grew an annualized 0.7 percent from the previous quarter, the Cabinet Office said today in Tokyo, less than a preliminary estimate of 1 percent and a 0.9 percent median forecast in a Bloomberg News survey. The current-account deficit widened to 1.59 trillion yen ($15.4 billion), the largest in data going back to 1985, the finance ministry said.

Crude Slides

The Topix Oil and Coal Index fell 1.4 percent today as West Texas Intermediate and Brent crude prices fell for the first time in three days.

JX Holdings, Japan’s biggest refiner, dropped 1.6 percent to 538 yen. Idemitsu Kosan Co. lost 1.4 percent to 2,098 yen, while Showa Shell Sekiyu KK lost 1.1 percent to 981 yen.

Mitsubishi Heavy decreased 0.9 percent to 629 yen. Boeing said it’s checking for hairline cracks on the wings of about 40 of its 787 Dreamliners after supplier Mitsubishi Heavy alerted the planemaker about possible risks to the aircraft. A change in the wing-manufacturing process at Tokyo-based Mitsubishi may have led to cracks in a section of a wing rib, said Boeing spokesman Marc Birtel.

Ranbaxy Recall

Daiichi Sankyo lost 1.6 percent to 1,746 yen after its Indian unit Ranbaxy recalled two batches of its generic version of Pfizer Inc.’s Lipitor drug from the U.S. market, the second recall of the cholesterol lowering medicine in 15 months.

Among shares that rose, Shimizu gained 2.9 percent to 565 yen, its highest close since Jan. 29. Kajima Corp., a general contractor, added 3.1 percent to 368 yen. Taisei Corp., Japan’s biggest non-residential building construction company by market value, climbed 1.5 percent to 466 yen.

Futures on the Standard & Poor’s 500 Index slid 0.5 percent, indicating the U.S. equities benchmark will retreat from a record high when trading starts in New York. U.S. shares rose last week as data showing stronger-than-forecast jobs growth outweighed concern the situation in Ukraine could worsen.

U.S. Jobs

Last week’s payrolls report showed a 175,000 gain in employment last month, following a revised 129,000 increase in January that was bigger than initially estimated. The median forecast of economists in a Bloomberg survey called for a 149,000 advance in February. The jobless rate unexpectedly climbed from a five-year low, rising to 6.7 percent from 6.6 percent as the number of people entering the job market swamped the quantity of positions available.

“Japanese shares had largely priced in the recovery in the U.S. jobs data,” said Yoshihisa Okamoto, Tokyo-based head of equity research at Mizuho Asset Management Co. “There’s nothing in the investment environment domestically right now that warrants shares to rise continuously.”

The Topix fell 5.7 percent this year, the biggest drop among major developed markets according to data compiled by Bloomberg, after surging 51 percent last year. The gauge traded at 1.20 times book value, compared with 2.62 for the S&P 500 and 1.89 for the Stoxx Europe 600 Index on March 7. Volume on the Japanese gauge was 27 percent below the 30-day average today.

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