Japan's Stocks Decline on U.S. Consumer Spending; Honda Drops

By Kanoko Matsuyama and Toshiro Hasegawa

Sept. 1 (Bloomberg) -- Japan's stocks declined after U.S. consumer spending slowed in July, raising concern that demand for Japanese-made goods will fall in the world's largest economy.

Honda Motor Co., which gets more than half its sales from North America, dropped 2.2 percent, while Sharp Corp., Japan's biggest maker of liquid crystal display TVs, declined 2.6 percent. Kawasaki Kisen Kaisha Ltd., Japan's third-biggest shipping line, was poised to fall after Morgan Stanley cut its rating and cargo fees for commodities fell for an eighth day.

``The fall in stocks will be heavily dependent on the macro statistics report from the U.S.,'' Tomochika Kitaoka, at a Tokyo- based strategist Mizuho Securities Co. said in an interview with Bloomberg Television.

The Nikkei 225 Stock Average dropped 185.22, or 1.4 percent, to 12,887.65 at the 9:06 a.m. in Tokyo. The broader Topix index declined 18.92, or 1.5 percent, to 1,235.79.

Purchases in the U.S. rose 0.2 percent, one-third the pace in June, the Commerce Department said on Aug. 29 in Washington, while prices surged the most in 17 years.

Kawasaki Kisen was cut to ``equal-weight'' from ``overweight'' at Morgan Stanley. The Baltic Dry Index, a measure of shipping costs for commodities, fell for an eighth-consecutive trading day.

To contact the reporters for this story: Kanoko Matsuyama in Tokyo at kmatsuyama2@bloomberg.net.