Japan's Stock Futures Fall on Worsening Auto, Financial Outlook

By Makiko Kitamura and Masaki Kondo

July 3 (Bloomberg) -- Japan's stock futures fell on mounting concern General Motors Corp. may face bankruptcy and U.S. banks will post further credit-related losses.

U.S.-traded receipts of Toyota Motor Corp., maker of the best-selling Corolla model in the U.S., retreated 2 percent from the closing share price in Tokyo yesterday. Mizuho Financial Group Inc., the Japanese bank most heavily hit by the collapse of the U.S. mortgage market, declined 1.2 percent.

GM shares fell to their lowest since 1954 in New York yesterday after a Merrill Lynch & Co. analyst said it may need to raise as much as $15 billion and faces possible bankruptcy. The carmaker has sufficient liquidity, the company said.

``Cars and financials are the heart of the U.S. economy,'' said Yoku Ihara, head of equity research at Tokyo-based Retela Crea Securities Co. ``When GM rattles, so does the U.S. economy.''

Nikkei 225 Stock Average futures expiring in September last traded at 13,230 in Chicago, 0.5 percent lower than the close of 13,290 in Osaka and 0.6 percent down from 13,315 in Singapore yesterday. The Bank of New York Japan ADR Index, which tracks American depositary receipts of Japanese companies, slid 2.3 percent.

Merrill Lynch and Citigroup Inc. had their second-quarter earnings cut by Oppenheimer & Co. on expectations of writedowns related to subprime mortgages and bond-insurer downgrades.

Crude oil rose 1.8 percent to $143.57 a barrel after touching a record $144.32. Copper rose to a record $8,940 a metric ton, and gold advanced to $946.50 an ounce.

The Nikkei dropped 1.3 percent to 13,286.37 yesterday, a 10th-straight decline, the longest streak since March 1965. The broader Topix index slumped 18.92, or 1.4 percent, to 1,301.15.

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