Japanese Stocks Tumble After Oil Talks Deadlock as Yen Advances

  • Insurers, Sony, Toyota drop in wake of deadly earthquake
  • Apple suppliers decline on report that iPhone sales slow

Japanese stocks tumbled by the most in two weeks after talks between OPEC members and other oil producers ended without any agreement on limiting supplies, while the yen gained after the Group of 20 finance ministers signaled opposition to curbing the currency’s strength.

Energy stocks fell as crude futures sank. Insurers were the largest losers in the wake of Thursday’s earthquake and strong aftershocks Saturday that pushed the death toll higher. Companies that halted some production after the quake also dropped, including Sony Corp., which lost 6.8 percent.

The Topix index slumped 3 percent to 1,320.15 at the close in Tokyo, with all but one of its 33 industry groups falling, after rising last week by the most in two months. The Nikkei 225 Stock Average dropped 3.4 percent to 16,275.95. The yen rose 0.7 percent to 107.95 per dollar, strengthening for a second day after Japan’s G-20 counterparts signaled opposition to shielding the country’s fragile economy via intervention to curb the currency’s strength.

“Expectations were too high that oil output would be frozen. As we shed those expectations, it becomes easier for a risk-off mood to kick in,” said Yoshinori Ogawa, a market strategist at Okasan Securities Co. in Tokyo. The G-20 outcome is “a negative for Japan and creates a view that government intervention in the foreign-exchange market will be difficult.”

No Agreement

The failure to reach an agreement in Doha is destabilizing oil prices that rebounded amid prospects for an easing in a global surplus. Discussions stumbled after Saudi Arabia and other Gulf nations wouldn’t agree to any deal unless all OPEC members joined including Iran, which wasn’t at the meeting, Russian Energy Minister Alexander Novak told reporters afterwards. Gains in commodity prices since mid-February have helped drive equities higher.

West Texas Intermediate crude fell 4.8 percent $38.42 a barrel, sending oil explorer Inpex Corp. 3.1 percent lower.

G-20 finance chiefs reiterated a pledge on Friday to refrain from weakening their currencies to gain a trade edge over rivals, while stating that “disorderly movements” in exchange rates can be harmful. The yen has risen about 11 percent this year against the dollar.

U.S. Treasury Secretary Jacob J. Lew said Japan needed to focus on domestic demand instead of exports and that the yen’s recent appreciation has been “orderly.” His comments were a clear warning the U.S. doesn’t view yen intervention as warranted.

Exporters plunged on the yen’s strength, with Subaru carmaker Fuji Heavy Industries Ltd. and Mazda Motor Corp. both falling more than 4 percent.

Toyota Motor Corp. dropped 4.8 percent as a report said its operating profit may be reduced by about 30 billion yen ($277 million) for the quarter ending in June after the earthquakes disrupted parts supplies. Production shifts that stopped late last week at Toyota’s Kyushu factories will extend to other assembly lines in stages throughout this week, Japan’s largest automaker said in a statement.

Quake Toll

Prime Minister Shinzo Abe increased the number of rescue workers to 25,000 in the earthquake-stricken south of the country where 42 people have died since Thursday in the nation’s most devastating natural disaster since March 2011. Hundreds are seriously injured and more than 100,000 have been evacuated to shelters, according to Kumamoto Prefecture’s disaster countermeasures office.

An initial earthquake came on Thursday night, followed by more shocks that caused intense shaking, including a magnitude 7.3 quake that hit at 1:25 a.m. local time Saturday. Television footage showed houses flattened and landslides that had swallowed up roads and railway lines in the village of Minamiaso, where at least 11 people are missing, NHK reported on Sunday.

Dai-Ichi Life Insurance Co. tumbled 5.6 percent, while Tokio Marine Holdings Inc. lost 5.9 percent. The Topix Insurance Index sank 5.8 percent, the most since Aug. 24.

Futures on the Standard & Poor’s 500 Index dropped 0.6 percent after the underlying gauge slipped 0.1 percent on Friday. Technology shares fell, including Apple Inc., which lost 2 percent on a report that iPhone sales were slower-than-expected.

Apple’s Japanese suppliers retreated on Monday, including Alps Electric Co., which plunged 7.2 percent. Japan Display Inc., which provides smartphone screens, fell 4.7 percent.

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