By Masaki Kondo and Toshiro Hasegawa
Nov. 13 (Bloomberg) -- Japan stocks fell to a two-week low as earnings forecasts in the U.S. indicated the world's biggest economy is weakening, and reports Japan's biggest banks may sell new shares raised dilution concerns.
Sony Corp. slumped 8.7 percent after U.S. retailer Best Buy Co. cut its forecast on a spending slowdown, and the yen rose to the highest this month. Chipmaker Elpida Memory Inc. plunged 13 percent after rival Intel Corp. cut its sales forecast. Mizuho Financial Group Inc. sank 6.6 percent on speculation it will sell new shares, and the U.S. Treasury scrapped plans to buy mortgage assets, feeding concern the financial crisis is deepening.
The Nikkei 225 Stock Average dropped 456.87, or 5.3 percent, to close at 8,238.64 in Tokyo. The broader Topix index fell 37.70, or 4.3 percent, to 837.53. Both gauges sank to the lowest since Oct. 29. The Nikkei rallied as much as 33 percent from a 26-year low on Oct. 27, and has since pared that gain by more than half.
``Best Buy's poor earnings is an indication of just how fast consumer sentiment is imploding in the U.S.,'' said Kazuya Nakamura, who helps oversee about $10 billion at Norinchukin Zenkyoren Asset Management Co. in Tokyo. ``The continued expansion of targets for the financial bailout package is also indicative of the severity of the crisis.''
Shimizu Corp. led a rally by construction companies after brokerages lifted their ratings on the companies.
U.S. Consumers
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.
The International Monetary Fund said on Nov. 7 the U.S., Europe and Japan may see their first simultaneous recession since World War II. At home, Prime Minister Taro Aso has pledged a 2 trillion yen ($20 billion) stimulus plan to help households.
Sony, which gets a quarter of its sales from the U.S., dropped 8.7 percent to 2,000 yen, while Nintendo Co., the world's biggest maker of handheld game players, lost 6.9 percent to 28,550 yen in Osaka trading. Canon Inc., the largest digital- camera maker, retreated 6.3 percent to 2,850 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.
``Declines in home prices, stock values and jobs are a triple threat to U.S. consumers, who also must contend with tighter credit,'' said Masaru Hamasaki, senior strategist at Toyota Asset Management Co. in Tokyo, which manages about $15 billion. ``There is no prospect in sight for spending growth.''
Chip Slump
Elpida, Japan's biggest maker of computer-memory chips, fell 13 percent to 477 yen, near a record low. NEC Electronics Corp., the nation's No. 3 chipmaker, slipped 7.6 percent to 1,041 yen. Tokyo Electron Ltd., the world's second-biggest producer of semiconductor equipment, lost 6.9 percent to 2,925 yen.
Intel, the largest computer-chip maker, slashed its fourth- quarter sales outlook by about $1 billion, as customers worldwide ``aggressively'' cut orders, the California-based company said today. After the announcement, S&P 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 6.6 percent to 254,500 yen. The lender may sell preferred securities by the end of this year to improve capital, a person familiar with the plan said. Rising bad debts and losses on stockholdings have forced Japan's five-largest banks to cut profit targets.
TARP Change
Market leader Mitsubishi UFJ Financial Group Inc. lost 3.7 percent to 592 yen. The bank 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.
Treasury and Federal Reserve officials are exploring a new ``facility'' to bolster the market for securities backed by assets, Treasury Secretary Henry Paulson said yesterday. Buying mortgage-related assets -- the reason the Troubled Asset Relief Program was established -- is no longer being considered, he said.
Shimizu, builder of Japan's first Western-style hotel in 1859, jumped 13 percent to 492 yen. Obayashi Corp. rallied 10 percent to 526 yen, while Kajima Corp., the country's biggest listed construction company, advanced 8 percent to 297 yen. The three companies were the top winners on the Nikkei today.
Yoshiaki Komatsu, an analyst at Nomura Securities Co. in Tokyo, raised his ratings on Obayashi and Kajima citing prospects for a recovery in profit next year. Mitsubishi UFJ Securities Co. boosted it recommendation on Shimizu to ``outperform.''
Price-Fixing Fines
Sharp Corp., Japan's biggest maker of liquid crystal display televisions, declined 8.4 percent to 667 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.
Asahi Glass Co. sank 5 percent to 515 yen and Nippon Sheet Glass Co. lost 9 percent to 314 yen. The companies, Asia's two largest glassmakers, were fined 113.5 million euros ($142 million) and 370 million euros respectively by the European Union over claims they fixed prices on car windows.
To contact the reporters for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net.
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