Japan's Stock Futures Drop on U.S. Unemployment, Stronger Yen

By Masaki Kondo

Sept. 5 (Bloomberg) -- Japan's stock futures tumbled 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.

U.S.-traded receipts of Honda Motor Co. sank 4.1 percent from the closing share price in Tokyo yesterday. Canon Inc. slumped 3.9 percent after the yen strengthened against the euro and dollar, cutting the value of overseas sales. Mizuho Financial Group Inc. dropped 4.9 percent after Bill Gross, manager of the world's biggest bond fund, warned of a ``financial tsunami.'' Sony Corp. lost 3.4 percent after a worldwide computer recall.

``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.

Nikkei 225 Stock Average futures expiring in September closed at 12,235 in Chicago, 2.7 percent lower than 12,580 earlier in Osaka and 2.8 percent down from 12,590 in Singapore. The Bank of New York Japan ADR Index, which tracks American depositary receipts of Japanese companies, slumped 3.4 percent.

Yesterday, the Nikkei retreated 1 percent to 12,557.66 in Tokyo. The broader Topix index dropped 1.6 percent to 1,201.65, the lowest close since March 19.

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.

`Financial Tsunami'

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.

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.''

Sony yesterday recalled about 440,000 units of its Vaio notebook computers, citing a risk of overheating that may lead to burns. The company didn't provide an estimated cost for the recall.

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