Japanese Stocks Fall a 2nd Day on Commodity Slump, Stronger Yen

By Masaki Kondo

Oct. 23 (Bloomberg) -- Japan stocks fell a second day after commodity prices tumbled on increased speculation a global economic slowdown will reduce demand for raw materials.

Mitsubishi Corp., a Japanese trading house that gets half its profit from commodities, was poised to slide after oil sank to a 16-month low. Mitsubishi Motors Corp. retreated 4 percent after the yen appreciated against the euro to the strongest in five years.

``The large swing in foreign exchange has raised a chance Japanese companies will have to cut their earnings forecasts even deeper,'' Mitsushige Akino, who oversees about $468 million at Tokyo-based Ichiyoshi Investment Management Co., said in an interview with Bloomberg Television.

The Nikkei 225 Stock Average declined 130.82, or 1.5 percent, to 8,543.87 as of 9:02 a.m. in Tokyo. The broader Topix index fell 13.12, or 1.5 percent, to 876.11. Nikkei futures in Osaka traded at 8,250, indicating the gauge may decline to a new five- year low.

Crude oil for December delivery dropped 7.5 percent to $66.75 a barrel in New York yesterday, the lowest settlement since June 2007 as an economic slowdown reduced fuel consumption. Copper futures declined to as much as $1.823, the lowest since November 2005, while gold sank 4.3 percent.

A $1 change in the price of a barrel of oil alters Mitsubishi's annual net income by 1 billion yen ($10 million), according to Mitsubishi UFJ Securities Co.

Meanwhile, the Japanese currency appreciated against the euro to as much as 124.63, the strongest since November 2003, while strengthening against the dollar to as much as 97.23. A stronger yen diminishes the repatriated value of overseas sales.

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