Japan's Stocks Tumble, Nearing Four-Year Low, on Bank Concern

By Masaki Kondo

Sept. 18 (Bloomberg) -- Japanese stocks fell toward a four- year low on concern more global financial firms will collapse after the U.S. government took over American International Group Inc. and reports Morgan Stanley is seeking a buyer.

Mizuho Financial Group Inc., Japan's second-biggest listed bank, sank 7 percent, while brokerage Nomura Holdings Inc. lost 6.1 percent. Sony Corp. headed for a five-year low after Goldman Sachs Group Inc. cut its rating. Sumitomo Metal Mining Co., Japan's biggest gold producer, jumped 3.5 percent after prices for the precious metal surged the most in nine years.

``Amid confusion and anxiety in financial markets, investors are more and more reluctant to take risk,'' Yoshinori Nagano, a Tokyo-based senior strategist at Daiwa Asset Management Co., which manages $94 billion, said in an interview with Bloomberg Television. ``Everything hangs on U.S. financial firms.''

The Nikkei 225 Stock Average declined 364.10, or 3.1 percent, to 11,385.69 as of 9:32 a.m. in Tokyo, set for the lowest close since June 2005. The broader Topix index fell 35.86, or 3.2 percent, to 1,085.57, a level not seen since December 2004. All but one of 33 industry groups on the Topix retreated.

Lehman Brothers Holdings Inc. filed for bankruptcy this week and the U.S. government had to bail out largest U.S. insurer AIG, raising concern more global financial companies will fail. Morgan Stanley is weighing a merger with Wachovia Corp. and several other banks, people familiar with the matter said, which would follow the sale of rival brokerage Merrill Lynch & Co. to Bank of America Corp.

More than $19 trillion has been wiped off global stock market values since a high on Oct. 31 as the worst U.S. housing recession since the Great Depression and a resulting global credit crisis slowed the world economy.

Sony Sinks

Mizuho dived 7 percent to 386,000 yen, while market leader Mitsubishi UFJ Financial Group Inc. declined 4.6 percent to 763 yen. Nomura, Japan's biggest brokerage, slumped 6.1 percent to 1,196 yen. Three of the five biggest losers among Topix groups were financial stocks.

Sony dived 6.7 percent to 3,340 yen, headed for the lowest since June 2003. Goldman analyst Yuji Fujimori cut his rating on the electronics maker to ``neutral'' from ``buy.''

The deepening credit crisis spurred investors to seek the relative safety of commodities. Gold futures for December delivery surged 9 percent yesterday, the most since September 1999, while crude oil for October delivery soared 6.6 percent, the biggest gain since June 6, to $97.16 a barrel.

Sumitomo Metal Mining jumped 3.5 percent to 1,081 yen, making it the biggest winner on the Nikkei.

Nikkei futures expiring in December retreated 3.4 percent to 11,330 in Osaka and slumped 3.1 percent to 11,330 in Singapore.

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