Japan Stocks Fall a 4th Week on Oil Concern; Tokai Carbon Rises

By Makiko Kitamura and Masaki Kondo

July 4 (Bloomberg) -- Japanese stocks headed for their fourth-straight weekly loss as record oil prices raised costs for companies and curbed the spending appetite of consumers.

Kyushu Electric Power Co. extended its decline to a third day. Seven & I Holdings Co. led retailers lower, while Round One Corp., which operates bowling alleys, sank to the lowest in three months. Tokai Carbon Co. soared the most in seven years on its plan to raise prices on graphite electrodes.

Crude has risen more than $5 a barrel this week, hitting a record $145.85 yesterday on concern Chinese demand may constrain supplies. Oil soared more than 50 percent this year, causing Japan's consumer prices to rise at the fastest in a decade.


``Investors have never experienced a surge in oil like this and they are clueless about when it ends or the effect on corporate earnings,'' said Yuuki Sakurai, general manager of financial and investment planning in Tokyo at Fukoku Mutual Life Insurance Co., which manages the equivalent of $54 billion.

The Nikkei 225 Stock Average fell 77.56, or 0.6 percent, to 13,187.84 as of 1:03 p.m. in Tokyo, extending its drop to a 12th day, the longest streak in 54 years. The broader Topix index sank 7.98, or 0.6 percent, to 1,290.04. Almost two stocks fell for every two that gained on the Topix.

For the week, the Nikkei has sunk 2.6 percent, while the Topix is down 2.3 percent. Both gauges have fallen for four weeks.

Kyushu Electric dropped 1.8 percent to 2,170 yen, while bigger rival Chubu Electric Power Co. fell 1.2 percent to 2,550 yen. Market leader Tokyo Electric Power Co. slid 0.7 percent to 2,770 yen.

A $1 change in the price of a barrel of crude changes Tokyo Electric's annual earnings by about 16 billion yen ($150 million), according to the company.

Electrode Prices

Seven & I, the nation's largest retailer, dropped 1.6 percent to 3,070 yen and ABC-Mart Inc., which makes and sells shoes, lost 5.4 percent to 2,470 yen. Round One retreated 2.6 percent to 112,000 yen, en route to the lowest since April 1.

Tokai Carbon leapt 10 percent to 1,117 yen, set for the sharpest jump since March 2001 and was the biggest winner on the Nikkei. Nippon Carbon Co. gained 6.4 percent, after having lost 14 percent in the past eight days.

Tokai Carbon will raise electrode prices for export by about 70 percent to pass on surging costs and as demand increases in emerging markets, the Tokyo-based company said today.

Mitsui Sumitomo Insurance Group Holdings Inc. added 2.7 percent to 3,490 yen, leading insurance companies to the third- biggest winner as a group on the Topix. Bigger rival T&D Holding Inc. rose 1.3 percent to 6,430 yen, with Sompo Japan Insurance Inc. gaining by almost the same degree.

``Insurers have nothing to do with foreign exchange or crude prices, and there is always demand for their services,'' Fukoku's Sakurai said. ``Investors are buying these stocks because of the lack of choices.''

Nikkei futures expiring in September lost 0.2 percent to 13,200 in Osaka and fell 0.2 percent to 13,210 in Singapore.

To contact the reporters on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net; Masaki Kondo in Tokyo at mkondo3@bloomberg.net.