Japan Stocks Drop on U.S. Retail Sales, G-20 Summit; Sony Falls

By Masaki Kondo

Nov. 17 (Bloomberg) -- Japan's stocks fell after U.S. retail sales dropped by a record, a leaders' summit delayed agreeing on specific measures to allay the global financial crisis, and the nation's economy sank into its first recession since 2001.

Sony Corp., which gets a quarter of its sales from the U.S., slumped 3.1 percent after U.S. spending slowed and the yen appreciated against the dollar. Toyota Motor Corp. declined 2.2 percent on a newspaper report the company will cut its sales target for the next year. Mitsui Fudosan Co., Japan's biggest developer, lost 7.3 percent after the Nikkei newspaper said rents for Tokyo offices dropped for the first time in six years.

The Nikkei 225 Stock Average retreated 63.46, or 0.8 percent, to 8,398.93 as of 10:26 a.m. in Tokyo. The broader Topix index fell 6.09, or 0.7 percent, to 840.82.

``U.S. retail sales, the outcome of the G-20 meeting and the yen's exchange rate point to a drop in today's stock market,'' Tomochika Kitaoka, a Tokyo-based strategist at Mizuho Securities Co., said in an interview with Bloomberg Television. ``The G-20 failed to meet investors' expectations.''

U.S. retail sales fell 2.8 percent last month, the biggest monthly slide since records began in 1992, the Commerce Department said on Nov. 14. Japan's gross domestic product dropped an annualized 0.4 percent in the third quarter, the Cabinet Office said before markets opened, confirming the economy entered a recession. Economists had estimated a 0.1 percent gain.

With consumer confidence in the U.S., Europe and Japan sinking to the lowest in at least 15 years, more than half of Japan's biggest companies have cut their full-year earnings targets, according to Shinko Research Institute Co.

Fiscal Stimulus

After a summit in Washington, leaders from the Group of 20 nations set a March deadline for recommendations on strengthening accounting standards, derivatives markets and oversight of hedge funds and debt-rating companies.

Sony, the world's second-biggest maker of consumer electronics, slid 3.1 percent to 2,010 yen, while Canon Inc., a digital camera maker that gets a third of its sales from the Americas, slumped 3.6 percent to 2,810 yen. Nissan Motor Co., Japan's third-largest automaker, dropped 4.3 percent to 356 yen.

Wider Slump

A slump in demand is spreading from North America to emerging markets, prompting Toyota to cut its global sales forecast for 2009 to less than 9 million vehicles from 9.7 million, the Tokyo Shimbun reported yesterday. Toyota's stock dropped 2.2 percent to 3,070 yen.

The yen appreciated against the dollar to as much as 95.88 today from 97.07 at the close of stock trading in Tokyo on Nov. 14, while strengthening against the euro to as much as 120.19 from 123.68. A 1 yen change against the dollar alters Canon's annual operating profit by 2.6 billion yen ($27 million), the company said on Oct. 27.

Mitsui Fudosan sank 7.3 percent to 1,353 yen, and Mitsubishi Estate Co., the nation's second-biggest real estate company, retreated 7.5 percent to 1,365 yen. Sumitomo Realty & Development Co., the No. 3, stumbled 7.8 percent to 1,210 yen. A gauge of real-estate companies posted the steepest drop among 33 industry groups on the Topix.

Building owners are lowering rents for new office buildings in Tokyo as an economic slowdown prevents tenants from expanding their operations or moving to new offices, the Nikkei said today, citing its own survey.

Nikkei futures expiring in December retreated 2.7 percent to 8,250 in Osaka and slumped 2.9 percent to 8,265 in Singapore.

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