Japanese Stocks Tumble a Fifth Day as Financial Crisis Worsens

By Patrick Rial

Oct. 8 (Bloomberg) -- Japanese shares slumped for a fifth consecutive day as the deepening credit crisis slows global economic growth.

Toyota Motor Corp., the world's second-largest automaker, fell 5.1 percent after Nikko Citigroup Ltd. cut its rating to ``sell.'' Mitsubishi UFJ Financial Group Inc., which is investing $9 billion in Morgan Stanley, dropped 2.8 percent after Morgan's shares fell as much as 40 percent yesterday. Elpida Memory Inc., the nation's largest computer memory maker, slumped 7.8 percent.

The Nikkei 225 Stock Average fell 356.66, or 3.5 percent, to 9,799.24 as of 9:28 a.m. in Tokyo. The broader Topix index declined 26.18, or 2.7 percent, to 951.43. The gauge has lost 14 percent over the last five sessions.

``The market is being pounded by worries about both the real economy as well as the financial system,'' Hiroichi Nishi, an equities manager at Tokyo-based Nikko Cordial Securities Inc., said in an interview with Bloomberg TV. ``The ongoing drop in U.S. markets and weakening dollar are pointing to another day of selling here.''

Toyota plunged 5.1 percent to 3,520 yen. Investors should ``sell'' Toyota's shares, according to Nikko Citigroup's Noriyuki Matsushima. Matsushima had previously maintained a ``buy'' rating on the stock. Operating profit is likely to be 1.1 trillion yen ($10.9 billion) for the year ending in March, according to the analyst, 31 percent below the company's estimate.

The Nikkei said the company's operating profit may drop 40 percent this year to 1.3 trillion due to slowing demand for autos.

Interest Rate Cut?

Rival Honda Motor Co., Japan's No. 2 automaker, slid 5.5 percent to 2,430 yen. Hino Motors Ltd., which makes trucks for Toyota, dropped 5.9 percent to 322 yen after Nikko Citigroup also lowered the shares to ``hold'' from ``buy.''

Mitsubishi UFJ, the nation's largest listed bank, fell 2.6 percent to 790 yen. Sumitomo Mitsui Financial Group Inc., Japan's third largest, declined 1.7 percent to 588,000 yen.

Continued efforts by political leaders have done little to assuage concern that the credit crisis is growing more serious. Federal Reserve Chairman Ben S. Bernanke signaled yesterday the central bank is ready to reduce interest rates, which was only able to spark a temporary rebound in U.S. markets.

Meanwhile, the U.K. is preparing a rescue package for British banks including cash injections and deposit guarantees, according to three people familiar with the plan. Royal Bank of Scotland Group Plc, the U.K.'s second-biggest bank, plummeted 39 percent yesterday as a downgrade in its credit rating sparked concerns of a run on the bank.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net.