Japan Stocks Fall on Hypo Real Estate Bailout, U.S. Job Losses

By Masaki Kondo

Oct. 6 (Bloomberg) -- Japan's stocks fell as the biggest U.S. loss of jobs in five years and a bailout of Hypo Real Estate Holding AG fueled concern that a $700 billion bank rescue plan will fail to stem the global credit crisis.

Canon Inc., the world's biggest digital-camera maker, retreated 1.6 percent. Shinsei Bank Ltd. led financial shares lower after Germany agreed on a rescue plan for Hypo. Mitsui Fudosan Co., Japan's largest real-estate company, was poised to fall after UBS AG slashed its recommendation.

``Whereas measures to contain the credit crisis are being prepared, the deterioration of the global economy is increasingly apparent,'' Ryoji Musha, Tokyo-based chief investment officer at Deutsche Securities Inc., said in an interview with Bloomberg Television.

The Nikkei 225 Stock Average declined 115.29, or 1.1 percent, to 10,822.85 as of 9:04 a.m. in Tokyo. The broader Topix index fell 10.09, or 1 percent, to 1,037.88. All but three of 33 industry groups on the Topix slumped.

Concern turbulence in the credit market will spill over to the broader economy weighed on stock markets across the globe, driving down the MSCI World Index by 12 percent in September, the worst in a decade. The Nikkei lost 14 percent last month.

U.S. President George W. Bush signed a $700 billion bank rescue package into law to stem the crisis, which has claimed Bear Stearns Cos. and Lehman Brothers Holdings Inc. The legislation enables the government to purchase non-performing assets from financial institutions and to suspend an accounting rule requiring businesses to report losses if asset values fall.

U.S. payrolls dropped 159,000 last month, the most in five years, the Labor Department said on Oct. 3. The world's largest economy has now lost 760,000 jobs this year, compared with the 1.1 million created last year.

Nikkei futures expiring in December retreated 1.7 percent to 10,770 in Osaka and slumped 1.9 percent to 10,770 in Singapore.

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