Japan Stocks Plunge, Set for Weekly Decline, on U.S. Jobs, Yen

By Masaki Kondo

Sept. 5 (Bloomberg) -- Japan's stocks tumbled, headed for the worst weekly slump in a year, after jobless claims in the U.S. rose to a five-year high, deepening concern demand for Japanese- made goods will fall in the world's largest economy.

Komatsu Ltd., the world's second-biggest maker of earthmoving equipment, tumbled 4.7 percent, set for the worst week in eight years. Mazda Motor Corp., Japan's fourth-biggest automaker, sank 6.5 percent after the yen rose against the euro and dollar, cutting the value of overseas sales. Resona Holdings Inc. fell 9.4 percent after Bill Gross, manager of the world's biggest bond fund, warned of a ``financial tsunami.''

``There is an ongoing move in the market where investors are factoring in a worsening global economy,'' Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., said in an interview with Bloomberg Television.

The Nikkei 225 Stock Average declined 344.60, or 2.7 percent, to 12,213.06 as of 9:48 a.m. in Tokyo. The broader Topix index fell 32.83, or 2.7 percent, to 1,168.82, set for the biggest slump since March 17. The Topix was headed for a 6.9 percent weekly drop, the worst since Aug. 17 last year.

The number of people staying on jobless rolls rose to 3.435 million in the U.S., the highest since November 2003, in the week ended Aug. 23, the Labor Department said yesterday. First-time claims for unemployment benefits increased last week, while economists had expected claims to fall.

The European Central Bank lowered its economic growth projection for 2008 to 1.4 percent from 1.8 percent and its 2009 forecast to 1.2 percent from 1.5 percent. The yen rose against the euro to a level not seen in more than a year and appreciated versus the dollar to as much as 105.69, the strongest since July 17. A stronger local currency reduces Japanese companies' repatriated overseas sales.

Europe's Slowdown

Japanese businesses cut investment in the second quarter amid record oil and commodity prices and a global slowdown that damped demand for the country's exports, the Ministry of Finance said today.

Komatsu dropped 4.7 percent to 1,915 yen, headed for a 17 percent weekly drop, the most since October 2000. Mazda dived 6.5 percent to 529 yen. Nintendo Co., the world's biggest maker of handheld game players, lost 3.8 percent to 51,300 yen in Osaka trading after Nikko Citigroup Ltd. lowered its rating on the stock to ``hold'' from ``buy,'' saying earnings will peak out this business year.

Daiwa Securities Group Inc., Japan's second-largest brokerage, said yesterday a slowdown in Europe's economy will likely drive down profit at Japanese companies more than it had previously estimated.

Resona, Japan's fourth-biggest bank, plunged 9.4 percent to 92,000 yen, the lowest since August 2003. Mizuho Financial Group Inc., the second largest, dropped 5.2 percent to 418,000 yen and its affiliate Shinko Securities Co. lost 4.3 percent to 292 yen.

Gross, co-chief investment officer of Pacific Investment Management Co., yesterday said the U.S. government needs to start using more of its money to support markets to stem a burgeoning ``financial tsunami.''

Nikkei futures expiring in September retreated 2.9 percent to 12,220 in Osaka and slumped 3 percent to 12,215 in Singapore.

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