Japan Stocks Drop on U.S. Growth Concerns; Fast Retailing Jumps

By Masaki Kondo

Oct. 3 (Bloomberg) -- Japan's stocks fell, capping the worst week in 13 months, on concern demand will decrease in the U.S. after economic reports showed the nation's largest overseas market is slowing.

Honda Motor Co., which gets more than half its profit in North America, fell 5.5 percent as a credit crisis weighs on the global economy. Orix Corp., a leasing-services provider, plunged 11 percent on speculation financial businesses will run out of cash amid tightening credit. Fast Retailing Co., Japan's biggest clothing retailer, surged 14 percent, the most in five years, after sales at its stores jumped by a fifth.

``Investors' focus is shifting from a financial crisis to a worsening economy with a slowdown in the U.S. spreading among other nations,'' said Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., which oversees about $61 billion in Tokyo. ``Their views on the fundamentals of the global economy are radically changing.

The Nikkei 225 Stock Average declined 216.62, or 1.9 percent, to close at 10,938.14 in Tokyo. The broader Topix index fell 29, or 2.7 percent, to 1,047.97, the lowest since February 2004. The Topix had a weekly drop of 8.7 percent, the worst since August 2007. Four stocks slumped for each that rose on the Topix.

About $20 trillion has been erased from global stock markets since a high on Oct. 31 as the worst U.S. housing recession since the Great Depression led to a slowdown in the world's economy. The International Monetary Fund yesterday said the U.S. is poised to encounter a ``sharp downturn'' as financial turmoil ``has mutated into a full-blown crisis.''

Nikkei futures expiring in December retreated 1.4 percent to 10,990 in Osaka and slid 1.9 percent to 10,990 in Singapore.

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