Japan Stocks Fall as Recession Concern Heightens; Toyota Gains

By Masaki Kondo
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Aug. 8 (Bloomberg) -- Japan's stocks fell a second day after the government suggested the country is in recession and slowing demand for commodities cut cargo rates for shipping lines.

Sanyo Electric Co., the world's largest maker of rechargeable batteries, fell the most in more than two months after profit fell by a quarter. Mitsui O.S.K. Lines Ltd. led marine transport companies to their biggest drop in six months after shipping costs dropped a 20th day and UBS AG cut ratings. Toyota Motor Corp. surged the most in two weeks after its profit, which fell the most in five years, still beat analyst estimates.

``Looking at company earnings reported so far, I see no new vista opening up,'' Soichiro Monji, chief strategist at Daiwa SB Investments Ltd., said in an interview with Bloomberg Television.

The Nikkei 225 Stock Average dipped 18.62, or 0.1 percent, to 13,106.37 as of 10:23 a.m. in Tokyo. The broader Topix index retreated 6.02, or 0.5 percent, to 1,252.79. The Nikkei headed for a weekly gain of 0.1 percent, while the Topix was set to lose 1.6 percent.

Japan's government said yesterday the economy is ``weakening'' for the first time since May 2001 and may be in a recession. Meanwhile, the number of Americans filing first-time claims for unemployment benefits climbed to the highest in six years, according to a report released by the Labor Department, while economists had expected claims would fall.

Sanyo shares dropped 6.5 percent to 217 yen, the sharpest drop since May 26 after saying first-quarter operating profit dropped 24 percent to 5 billion yen ($46 million), citing the stronger yen and higher materials costs. Konica Minolta Holdings Inc., the world's second-largest maker of film used in liquid- crystal displays, sank 5.4 percent to 1,655 yen after reporting a quarterly drop in operating profit.

Shipping Companies

Mitsui O.S.K., the nation's second-biggest shipper, tumbled 7.3 percent to 1,182 yen, set for the biggest plunge since Feb. 6, while market leader Nippon Yusen K.K. declined 5.6 percent to 821 yen. Kawasaki Kisen Kaisha Ltd. retreated 6.3 percent to 700 yen. Shipping companies as a group headed for the sharpest drop since August 2007, and were the biggest loser among 33 industry groups on the Topix.

UBS slashed its rating on the three shippers from ``buy,'' citing a decline in Europe-bound container charges. The Baltic Dry Index, a measure of coal, iron ore and grain shipping costs, slid for a 20th day as commodity prices fell, the longest losing streak in three years.

Crane Accident

Mitsui Engineering & Shipbuilding Co., Japan's second- largest shipyard, plummeted 14 percent to 251 yen, headed for the biggest retreat since August 2007. The company yesterday cut its first-half profit forecast by 83 percent on higher steel prices and costs linked to a crane accident.

Toyota, the world's second-largest carmaker, jumped 3.9 percent to 4,760 yen. The company posted a 28 percent drop in first-quarter net income to 353.7 billion yen, which was better than the 329 billion yen median estimate by five analysts compiled by Bloomberg.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.