Japan Stocks Fall on Toyota Target Cut, Jobs; Shionogi Rallies

By Masaki Kondo

Nov. 7 (Bloomberg) -- Japanese stocks fell a second day as the slowing global economy and strengthening yen prompted Toyota Motor Corp. and Olympus Corp. to cut profit targets by more than half, while U.S. jobless claims jumped to a 25-year high.

Toyota, the world's second-biggest automaker, slumped 9.2 percent. Olympus, an endoscope maker that counts Europe as its biggest overseas market, sank 9.3 percent. Inpex Corp., Japan's largest oil and gas explorer, lost 8.9 percent after crude fell to the lowest level in 19 months. Drugmaker Shionogi & Co., which posted a first-half profit gain on Nov. 4, climbed 4.9 percent.

The Nikkei 225 Stock Average slid 316.14, or 3.6 percent, to close at 8,583.00 in Tokyo, paring an earlier 7.1 percent decline. The broader Topix index fell 30.30, or 3.3 percent, to 879.00. The Nikkei, down 44 percent on the year, posted a weekly gain of 0.1 percent, while the Topix advanced 1.4 percent.

``As sales are slowing in developing countries, Toyota and other automakers can't mitigate slumping demand in North America,'' said Hiroshi Morikawa, a senior strategist at MU Investments Co., which manages about $14 billion in Tokyo. ``With stocks falling by such a degree, long-term investors are inclined to buy in rather than staying on the sidelines with cash.''

The carmaker cut its annual profit target by 56 percent to 550 billion yen ($5.67 billion), the lowest in nine years. Tighter credit and worsening consumer sentiment drove industry- wide U.S. car sales last month to the lowest level since 1983 on an annualized basis. The yen's 12 percent gain against the dollar and 24 percent jump versus the euro this year are also squeezing earnings at Toyota and other Japanese exporters.

The Labor Department said U.S. workers receiving unemployment-insurance checks totaled 3.843 million in the week ended Oct. 25, the highest level since 1983. The report foreshadowed a surge in the unemployment rate when the department releases its October jobs report later today.

Nikkei futures expiring in December dipped 2.2 percent to 8,610 in Osaka and slumped 2.8 percent to 8,625 in Singapore.

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