Japan Stocks Join Global Retreat as Greece Defers IMF Payment

Japanese stocks fell, joining a global retreat, after Greece became the first country to defer a payment to the International Monetary Fund since the 1980s as its game of brinkmanship with creditors goes down to the wire.

Nissha Printing Co., a touch-panel maker that relies on Europe for more than half of its sales, dropped 2.6 percent. Toyota Motor Corp. fell 0.7 percent, the second-biggest drag on the Topix index, after a report it may struggle to reach 2015 sales targets. Takata Corp. lost 1.3 percent after automotive recalls tied to the company’s faulty air bags widened and a person familiar with the matter said some of the replacements bags were defective. Railway operators gained after Jefferies Group LLC began coverage of the group with a mostly positive outlook.

The Topix retreated 0.4 percent to 1,667.06 at the close in Tokyo, dropping 0.4 percent this week for its first weekly loss in a month. The Nikkei 225 Stock Average declined 0.1 percent to 20,460.90. The MSCI World Index fell to its lowest level in a month after Greek Prime Minister Alex Tsipras rejected demands to continue harsh fiscal reforms in exchange for bailout funds.

“An all-out default is quite possible, although the European Union and European Central Bank will probably do their best to avoid the worst-case scenario of an uncontrollable default,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd. The uncertainty surrounding Greece, “coupled with the U.S. employment data tonight, means investors might be paring back positions a bit ahead of the weekend.”

Greece on Thursday told the IMF it would delay a debt payment of about $339 million due Friday, submitting a request to the fund to bundle payments totaling about $1.7 billion due this month into one lump-sum payment.

Greece’s Riddle

Greece also rejected the latest proposal from its international creditors, with the Finance Ministry saying the plan “can’t solve the riddle” and an agreement requires “immediate convergence of the institutions to more realistic” proposals. German Chancellor Angela Merkel said “we’re still far from reaching a conclusion.”

“Under the current form of austerity, Greece’s economy won’t get better and it won’t be able to pay its debt,” said Mitsuo Shimizu, Tokyo-based deputy general manager at Japan Asia Securities Group Ltd.

Stocks that rely on Europe for sales fell, with Nissha Printing dropping 2.6 percent. Car audio equipment-maker Alpine Electronics Inc., which gets nearly a third of revenue from the region, lost 1.8 percent.

Toyota said poor auto sales in resource-rich and emerging countries made it “very difficult” to meet this year’s sales target, sending shares 0.7 percent lower. Nissan Motor Co. declined 0.6 percent and Honda Motor Co. lost 0.8 percent.

Takata Recalls

Takata slumped 1.3 percent after Honda and Mazda Motor Corp. said they would recall more cars related to Takata’s defective air bags. Separately, a person familiar with the matter said about 10 percent of the 4.1 million air bags already fixed must be replaced again with a newer design.

Railroad stocks led gains today after Jefferies began coverage of the group. East Japan Railway Co. jumped 2.5 percent and Central Japan Railway Co. added 1.1 percent after Jefferies assigned a buy rating to the shares.

E-mini futures on the Standard & Poor’s 500 Index slid 0.1 percent after the underlying measure slumped 0.9 percent to a one-month low on Thursday in New York. Investors are awaiting data that economists predict may show a 226,000 increase in U.S. non-farm payrolls for May, after they rose 223,000 the month before.

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