Nikkei sets longest losing run in over half century

07.04.08, 3:04 AM ET

Japan - *Nikkei sets 12-day losing streak, longest since 1954

*Nikkei sheds 8.4 percent during the 12-day losing run

*Property firms hit on credit fears

(Adds trade volume, detail)

By Aiko Hayashi

TOKYO, July 4 (Reuters) - The Nikkei share average fell 0.2 percent on Friday to set its longest losing streak in more than half a century, dragged down by property stocks such as Sumitomo Realty & Development on credit fears.

Shares of apartment developer Urban Corp tumbled nearly 30 percent, leading a sharp decline among some midsize property companies on speculation they could be risky investments following a handful of recent bankruptcies in the sector.

"A 12-day losing streak sounds big but there were days when the market didn't fall much and the amount of decline is only about 1,200 points. It's just a matter of words," said Masaru Hamasaki, senior strategist at Toyota (nyse: TM - news - people ) Asset Management.

"Still, we have to stay alert as Japanese stocks couldn't avoid being sharply hit if a spiral of interest rate hikes in Europe, the expansion of difference in interest rates, a weaker dollar, high oil prices and weak stock prices emerges."

The benchmark Nikkei fell 27.51 points to 13,237.89, down for a 12th day and its longest losing run since a 15-day period in 1954.

The Nikkei fell 2.3 percent during the week, and gave up 8.4 percent during the 12-day losing run.

The broader Topix shed 0.01 percent to 1,297.88.

"The afternoon's market fall is due to property shares that are under huge pressure on credit worries. Investors think the real estate sector will have a tough time going forward," said Hiroaki Kuramochi, general manager of the financial institutions service department at Tokai Tokyo Securities.

PROPERTY STOCKS DOWN

Shares of Sumitomo Realty & Development dropped 3 percent to 2,075 yen and Mitsubishi Estate Co Ltd (other-otc: MITEF.PK - news - people ) fell 1.3 percent to 2,375 yen.

Urban tumbled 28.1 percent to 189 yen, while Zephyr Co which announced the bankruptcy of a subsidiary in May, dropped 6.3 percent to 19,800 yen.

"I don't know what kind of information people are basing their sell-off on, but at this point, a lot of people are selling on worries about credit risks," said Credit Suisse analyst Masahiro Mochizuki, referring to Urban's shares.

Last month's bankruptcy of real estate developer Suruga Corp has led investors to worry that others in the sector might go bust as they suffer from tight financing, soaring construction material prices and weak apartment sales.

Shares of Secom Co and Sohgo Security Services Co fell after Morgan Stanley (nyse: MS - news - people ) cut its ratings on Japan's top two security service firms to "equal-weight" from "overweight", predicting their earnings will fall short of market expectations.

"We doubt that the security services industry is the safe, defensive industry that the stock market expects it to be this term," Morgan Stanley analyst Naoshi Nema wrote in a note to clients.

Secom fell 3.8 percent to 5,080 yen. Sohgo Security Services slid 3.4 percent to 1,238 yen.

One bright spot was Tokai Carbon Co Ltd The stock jumped 11.4 percent to 1,132 yen after the firm said it had started negotiating with overseas customers to raise the price of its graphite electrodes, used in electric steel furnaces.

Trade was moderate on the Tokyo exchange's first section, with 1.83 billion shares changing hands, in line with last week's daily average.

Advancing stocks narrowly outpaced declining ones by 839 to 748. (Reporting by Aiko Hayashi; Editing by Sophie Hardach)