Japan Stocks Fall as Decline in Commodities Points to Slowdown

By Masaki Kondo

Nov. 12 (Bloomberg) -- Japanese stocks fell for a second day after prices for crude oil and copper declined, signaling a deeper slump in the global economy.

Inpex Corp., Japan's largest oil and gas explorer, dropped 3.9 percent after cutting its full-year profit target on the plunge in crude prices. Honda Motor Corp., the nation's second- biggest carmaker, sank 3.4 percent as concerns grew U.S. rival General Motors Corp. will go bankrupt. Mitsui Sumitomo Insurance Group Holdings Inc. dived 5.5 percent after saying first-half profit was half of its forecast.

The Nikkei 225 Stock Average declined 216.10, or 2.5 percent, to 8,593.20 as of 9:55 a.m. in Tokyo. The broader Topix index fell 20.10, or 2.3 percent, to 869.26, with almost four stocks dropping for each that rose. In New York, the Standard & Poor's 500 Index slid 2.2 percent.

``The deteriorating outlook for the economy carried the U.S. market down and will likely continue weighing on stocks here,'' Hiroichi Nishi, an equities manager at Tokyo-based Nikko Cordial Securities Inc., said in an interview with Bloomberg Television.

The Topix has fallen 40 percent this year as consumer spending shrank in the face of the financial crisis. Almost three-quarters of stocks on the gauge trade at below book value.

Crude for December delivery closed at $59.33 a barrel in New York yesterday, the lowest settlement since March 2007, on speculation the International Energy Agency will lower its 2009 demand forecast. Copper futures sank 5.9 percent to the lowest level since September 2005.

Falling Oil

Inpex slid 3.9 percent to 518,000 yen, set for the lowest level since Oct. 29. The company yesterday cut its annual net income target by 15 percent, prompting UBS AG to more than halve its 12-month price estimate on the stock to 680,000 yen.

Mitsubishi Corp., a trading company that gets more than half its profit from commodities, sank 7.3 percent to 1,399 yen, while Nippon Mining Holdings Inc., the nation's largest copper producer, dived 6.4 percent to 265 yen.

Honda dropped 3.4 percent to 2,165 yen, and Nissan Motor Co., Japan's third-biggest automaker, lost 3.1 percent to 411 yen. Mazda Motor Corp. retreated 2.6 percent to 185 yen.

GM, the biggest U.S. automaker, fell 13 percent yesterday, halving its value in five days. The company said on Nov. 7 it may run out of operating cash as soon as year's end, prompting House Speaker Nancy Pelosi to urge an emergency rescue plan for the nation's auto industry.

Spending Impact

``There's over a million people employed in the U.S. auto industry, so if GM goes under, that's going to have a major effect on consumer spending,'' said Katsuhiko Kodama, a senior strategist at Toyo Securities Co.

Mitsui Sumitomo Insurance slid 5.5 percent to 2,900 yen after saying first-half net income was 48 percent short of its target because of devalued stockholdings. Aioi Insurance Co. retreated 4.7 percent to 448 yen, while market leader Tokio Marine Holdings Inc. fell 3.3 percent to 3,240 yen.

The Tokyo Shimbun newspaper reported today that Hartford Financial Services Group Inc.'s Japanese unit may post a 20 billion yen ($205 million) loss this year because of losses on investment contracts.

Nikkei futures expiring in December retreated 1.9 percent to 8,610 in Osaka and slumped 1.9 percent to 8,610 in Singapore.

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