Japan Stocks Drop on U.S. Spending Concern; Sony, Mizuho Slump

By Masaki Kondo

Nov. 13 (Bloomberg) -- Japan stocks fell for a third day as earnings forecasts stoked concern the U.S. economy is worsening and on speculation banks will sell shares to raise capital.

Sony Corp., the world's second-biggest maker of consumer electronics, slumped 7.3 percent after U.S. retailer Best Buy Co. cut its forecast on a spending slowdown, and the yen rose to a two-week high. Advantest Corp., the largest maker of memory-chip testers, lost 6.1 percent after Intel Corp. cut its fourth- quarter sales forecast. Mizuho Financial Group Inc. sank 4.7 percent after a person familiar with the plan said the bank may sell 300 billion yen ($3.2 billion) in preferred shares.

The Nikkei 225 Stock Average declined 351.72, or 4 percent, to 8,343.79 as of 9:52 a.m. in Tokyo. The broader Topix index fell 30.44, or 3.5 percent, to 844.79, with almost nine stocks slumping for each that rose.

``Best Buy's forecast illustrates the dimming spending climate in the U.S.,'' Mitsushige Akino, who oversees about $468 million at Tokyo-based Ichiyoshi Investment Management Co., said in an interview with Bloomberg Television.

The collapse of the U.S. mortgage market sparked $950 billion in losses and writedowns at financial companies, which now threaten a global economic recession. Central banks in the U.S., U.K. and Japan are among those that have cut interest rates to stimulate spending and growth as consumer confidence wanes.

Best Buy, the largest U.S. electronics retailer, yesterday slashed its earnings forecast for the year through February, citing a ``seismic'' slowdown in consumer spending. Japan's exports to the U.S., which accounted for about a fifth of the total, fell 11 percent in September, while companies from Sony to Toyota Motor Corp. cut earnings forecasts in the past month.

Surging Yen

Sony, which gets a quarter of its sales from the U.S., dropped 7.3 percent to 2,030 yen, while Nintendo Co., the world's biggest maker of handheld game players, lost 4.6 percent to 29,060 yen in Osaka trading. Canon Inc., the largest digital- camera maker, retreated 4.6 percent to 2,900 yen.

The yen appreciated against the dollar to as much as 94.52 today from 97.71 at the close of stock trading in Tokyo yesterday, reducing the value of Japanese companies' repatriated sales and threatening deeper cuts in forecasts.

Advantest slipped 6.1 percent to 1,159 yen, and Tokyo Electron Ltd., the world's second-largest producer of semiconductor equipment, lost 5.3 percent to 2,975 yen. Elpida Memory Inc., Japan's biggest maker of computer-memory chips, fell 9.6 percent to 497 yen.

Chip Slump

Intel, the world's largest computer-chip maker, slashed its fourth-quarter sales outlook by about $1 billion, as customers worldwide are ``aggressively'' cutting orders, the company said today. After the announcement, Standard & Poor's 500 Index futures expiring in December dropped as much as 1.4 percent in Chicago from a 0.4 percent gain.

Mizuho, Japan's second-biggest listed bank, retreated 4.7 percent to 259,700 yen, while larger rival Mitsubishi UFJ Financial Group Inc. lost 4.4 percent to 588 yen.

Mizuho may sell preferred securities to institutional investors in Japan by the end of this year to improve capital, a person familiar with the plan said today. Mitsubishi UFJ will complete the sale of as much as 600 billion yen of common shares in mid-December, advancing a sale that had been planned sometime in the next year, Kyodo News Service said today.

Sharp Corp., Japan's biggest maker of liquid crystal display televisions, declined 6.2 percent to 683 yen. The Osaka-based company will book a $120 million one-time loss in the third quarter, the company said today before markets opened. Sharp, along with LG Display Co., Chunghwa Picture Tubes, agreed to pay fines for conspiring to fix prices of displays, the U.S. Justice Department announced.

Nikkei futures expiring in December retreated 4.7 percent to 8,330 in Osaka and Singapore.

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