Japan Stocks Slip as Yen Rises in Face of Noda's Call for Action

January 27, 2012 6:53 AM

Jan. 27 (Bloomberg) -- Japanese stocks fell for a second day as the yen strengthened even after Prime Minister Yoshihiko Noda pressed the central bank for “bold” action to counter the currency's gain. Energy companies and trading houses gained as commodity prices climbed.

Sony Corp., a consumer electronics maker that gets about 70 percent of its sales abroad, slid 1.4 percent. Nintendo Co. sank 4.1 percent after the video-game console maker tripled its loss forecast. Mitsubishi UFJ Financial Group Inc., Japan's top lender by market value, lost 1.4 percent, after U.S. banking stocks dropped on the Federal Reserve's pledge to keep rates near zero through 2014. Mitsui & Co., which counts commodities as its biggest source of profit, rose 2.1 percent as crude and metals prices gained.

The Nikkei 225 Stock Average fell 0.1 percent to 8,841.22 at the 3 p.m. close in Tokyo, with a weekly gain of 0.9 percent. The broader Topix slipped 0.5 percent to 761.13, with about three shares dropping for every two that gained.

“The yen just keeps getting stronger and it's hurting Japanese stocks,” said Tomoichiro Kubota, a market analyst at Matsui Securities Co. “With the Fed saying they'll keep zero rates for a long time and Europe facing all of these government bond redemptions, the concern has been reignited that the yen will keep rising.”

Futures on the Standard & Poor's 500 Index lost 0.3 percent today. The gauge lost 0.6 percent in New York yesterday after U.S. new home sales unexpectedly fell and jobless claims climbed.

Banking Shares Drop

Banking shares slid yesterday in New York after the Federal Reserve's pledge to keep interest rates at a record low for longer than originally forecast, spurring investors to seek higher yields.

Mitsubishi UFJ Financial Group slipped 1.4 percent to 351 yen. Mizuho Financial Group Inc., Japan's third-biggest bank by market value, lost 1.7 percent to 115 yen.

Japanese equities slumped after the yen extended gains even after Noda called on the Bank of Japan to take more aggressive steps to stem the currency's increase and deflation.

The yen appreciated as much as 76.90 against the dollar today in Tokyo, compared with 77.63 at the close of stock trading yesterday. The yen also strengthened to 100.77 against the euro from 101.89, cutting the value of income at some exporters.

Exporters Fall

Sony fell 1.4 percent to 1,414 yen. Kyocera Corp., an electronic equipment manufacturer that earns most of its revenue abroad, lost 2.1 percent to 6,500 yen.

Nintendo sank 4.1 percent to 10,310 yen after more than tripling its loss forecast to 65 billion yen ($844 million) for the fiscal year ending March. Sales of its 3DS handheld player have been sapped by rising demand for Apple Inc. gadgets such as the iPhone and iPad.

Energy companies and trading houses advanced the most in the 33 Topix industry groups. Mitsui & Co. rose 2.1 percent to 1,299 yen while Mitsubishi Corp. gained 2.3 percent to 1,757 yen. Inpex Corp., Japan's top oil explorer, added 2.9 percent to 528,000 yen, while Japan Drilling Co., an offshore exploration contractor, increased 1.9 percent to 2,536 yen.

Copper rose to a four-month high in New York yesterday. The London Metal Exchange Index gained 2.4 percent, the biggest rise since Jan. 10. Crude oil for March delivery added 0.3 percent to $99.70 a barrel yesterday in New York, the highest settlement since Jan. 19.

“The whole world is moving toward monetary easing,” said Seiichiro Iwamoto, who helps oversee about $35 billion at Mizuho Asset Management Co. in Tokyo. “Europe and the U.S. are injecting a lot of liquidity, and that's boosting commodities.”

The Topix tumbled 19 percent last year amid concern U.S. growth is sputtering and Europe's debt crisis will damage the banking system, damping demand in two of Japan's biggest export markets. The decline has cut the price of shares on the index to 0.9 times book value. That compares with 2.2 times for the Standard & Poor's 500 Index in the U.S. and 1.4 times for the Europe Stoxx 600 Index.

--With assistance from Yoshiaki Nohara in Tokyo. Editors: Jim Powell, Drew Gibson.