Japan Shares Drop After Quake, Paring Best Week Since February

  • Earthquake in south Japan kills at least 9, injures hundreds
  • Production halted at Honda, Bridgestone, Osaka Steel plants

Shares fell in Tokyo for the first time in four days, with the Topix index paring its best weekly gain since February, as investors weighed the fallout from an earthquake that has killed at least nine and injured hundreds in southern Japan.

The Topix dropped 0.7 percent to 1,361.40 at the close in Tokyo, with two shares falling for each that rose. The measure advanced 5.7 percent this week. The Nikkei 225 Stock Average retreated 0.4 percent to 16,848.03. Trading volume on the Topix was 8.6 percent below the 30-day average.

“We had a lot of gains over the past three days so it’s easier to see profit-taking,” said Juichi Wako, a senior strategist at Nomura Holdings Inc. in Tokyo. The region where Thursday’s quake struck “has manufacturers’ plants and bases, and it’s possible that there may be effects on individual companies through the supply chains.”

A magnitude 6.5 earthquake struck southern Japan on Thursday evening, killing at least nine people and injuring more than 750. It was the strongest temblor since the 2011 quake that triggered a massive tsunami and killed about 16,000 people in northeastern Japan.

Nuclear Reactors

Thursday’s quake struck in Kumamoto prefecture at 9:26 p.m. local time at a shallow depth of 10 kilometers (6.2 miles) and was followed by several strong aftershocks, the Japan Meteorological Agency said. There were no reports of damage to Kyushu Electric Power Co.’s Sendai nuclear reactors, the only operating plants in Japan.

All Nippon Airways Co. canceled two flights from Kumamoto, with all other flights operating as normal. Honda Motor Co. halted production lines at its Kumamoto plant, Bridgestone Corp. closed a factory producing rubber hoses to perform safety
checks, and Sony Corp. evacuated a factory as a precaution but said there was no fire or injury. Damage at other companies including Renesas Electronics Corp. and Suntory Holdings Ltd. appeared minimal.

Banks and exporters, including electric-appliance manufacturers and carmakers, were the biggest drags on the Topix. Mitsubishi UFJ Financial Group Inc. lost 1.7 percent, while Mizuho Financial Group Inc. fell 2.6 percent. Ono Pharmaceutical Co. sank 7.5 percent after Citigroup Inc. cut its rating on the drug maker. Osaka Steel Co. dropped 2.1 percent after announcing it suspended operations at its Kumamoto plant. Screen Holdings Co. added 2.3 percent after Deutsche Bank AG raised its rating on the semiconductor manufacturer.

Weaker Yen

The yen traded at 109.48 per dollar, following a three-day decline as Bank of Japan Governor Haruhiko Kuroda said excessive gains have corrected somewhat in the past few days. Oil fluctuated as a meeting of major crude producers in Doha this weekend is seen having minimal impact on global supplies.

The Topix still posted its best week since the week ended Feb. 19, when it rebounded from its lowest level this year.

Japanese shares tumbled into a bear market in mid-January as global shares plunged on concern over tanking oil prices and a slowdown in world economic growth. Although the Topix is up 14 percent from its Feb. 12 low, it is lagging its peers amid a global recovery. The gauge is still down 12 percent in 2016, the third-steepest decline among global markets. The index has fallen 4.9 percent since the Bank of Japan introduced negative interest rates on Jan. 29.

Futures on the Standard & Poor’s 500 Index fell less than 0.1 percent after the underlying U.S. equity gauge closed little changed on Thursday near a four-month high as investors assessed earnings releases and data showing the labor market is improving with little pickup in inflation.

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