By Masaki Kondo and Kotaro Tsunetomi
Sept. 11 (Bloomberg) -- Japan stocks tumbled, sending the Topix index to the brink of a three-year low, on concern falling asset values will batter global financial companies and the slowing economy will reduce manufacturing investment.
Nomura Holdings Inc., Japan's biggest brokerage, sank 5.9 percent after Lehman Brothers Holdings Inc. posted a record loss. Mitsubishi Heavy Industries Ltd. led equipment makers to the lowest in three years after machine orders declined. Mazda Motor Corp. plunged the most in seven years after the euro strengthened against the yen, reducing the value of its European sales.
Today's drop undoes a surge on Sept. 8 after the U.S. government took over mortgage lenders Fannie Mae and Freddie Mac.
``With the takeover of Fannie and Freddie the feeling was the problems of the financial system were over, and we could focus on the economy,'' said Kazuya Nakamura, who helps manage $10 billion at Norinchukin Zenkyoren Asset Management Co. in Tokyo. ``But now Lehman has sent us back to square one.''
The Nikkei 225 Stock Average retreated 244.13, or 2 percent, to close at 12,102.50 in Tokyo. The broader Topix index slumped 29.66, or 2.5 percent, to 1,162.72, the lowest since March 17, when the gauge reached a level not seen since June 2005.
Lehman, the fourth-biggest U.S. brokerage, yesterday reported a $3.9 billion third-quarter loss, the biggest in its 158-year history. That helped push global writedowns and credit losses caused by the collapse in the U.S. mortgage market to $511 billion, according to figures compiled by Bloomberg News.
Credit Concerns
The Nikkei soared 3.4 percent on Sept. 8 on optimism the Fannie and Freddie takeovers would quell credit-market concerns. The gauge has lost 21 percent this year as oil-driven inflation deterred spending and the credit squeeze caused a spate of corporate bankruptcies.
Nomura slid 5.9 percent, the most since Sept. 18, 2007, to 1,440 yen, while Shinko Securities Co. sank 6.6 percent to 299 yen. Mizuho Financial Group Inc., Japan's second-biggest publicly traded bank, retreated 5.3 percent to 445,000 yen, and Resona Holdings Inc., the fourth largest, plunged 9.7 percent to 106,600 yen, after having gained 26 percent in the past three days.
Four of the five biggest losers among the Topix's 33 industry groups were financial-related sectors.
``Investors expected positive news from Lehman, which, as it turns out, didn't deliver anything good,'' Mitsushige Akino, who oversees about $468 million at Ichiyoshi Investment Management Co. in Tokyo, said in an interview with Bloomberg Television.
Equipment Orders
Mitsubishi Heavy Industries, Japan's largest maker of power equipment, fell 5.5 percent to 464 yen, while Sumitomo Heavy Industries Ltd. declined 5.3 percent to 469 yen. Daikin Industries Ltd., the world's second-biggest maker of air conditioners, slumped 3.9 percent to 3,430 yen. Machinery makers as a group sank to the lowest since July 2005.
Equipment orders fell in July for a second-straight month, declining 3.9 percent from June, the Cabinet Office said today before markets opened. Economists had estimated orders, an indicator of capital spending in the next three to six months, fell 3.6 percent.
Mitsubishi Paper Mills Ltd. tumbled 4.7 percent to 223 yen, leading peers to the steepest decline since Aug. 4. Oji Paper Co., the nation's biggest papermaker, fell 3.9 percent to 547 yen, and closest rival Nippon Paper Group Inc. lost 4 percent to 333,000 yen. Papermakers had gained 47 percent since March 17, the most among Topix groups.
Mazda sank 10 percent to 463 yen, the biggest drop since September 2001, after the euro fell against the yen, cutting earnings from the carmaker's most profitable market. It was the second-biggest loser on the MSCI World Index, followed by Resona.
`Big Impact'
The European Commission cut its growth outlook for the region for the rest of this year, sending the euro to the lowest in 13 months against the yen. A weaker euro hurts Japanese exporters by reducing the value of repatriated sales.
``The recent strength in the yen against the euro has a big impact,'' Noriyuki Matsushima, a Tokyo-based analyst at Nikko Citigroup Ltd., said in a report today. He cut his rating on Mazda, Japan's fourth-largest automaker, to ``sell'' and on Suzuki Motor Corp. to ``hold.''
Suzuki, the nation's second-largest minicar maker, sank 4.7 percent to 2,110 yen. Hino Motors Ltd. fell 4.9 percent to 465 yen, the lowest since March 2003, after Credit Suisse Group cut its recommendation on the truckmaker to ``neutral.''
Nikkei futures expiring in September retreated 1.7 percent to 12,120 in Osaka and 1.5 percent to 12,135 in Singapore.
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
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