Japan Stocks Slump as U.S. Jobless Claims Soar, Oil Plummets

By Patrick Rial

Nov. 21 (Bloomberg) -- Japanesestocks tumbled for a fourth day on signs the global recession is deepening after U.S. unemployment claims surged and crude oil plunged below $50.

Honda Motor Co., which gets more than half its sales in North America, dropped 4.8 percent after the company said it plans to cut production there further. Mitsui & Co., which generates the most revenue from oil among Japan's trading houses, lost 3 percent. Orix Corp., the nation's largest non-bank financial company, plunged 9.7 percent after announcing the terms of a convertible bond issue.

``There's really not much good news to latch on to,'' Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages about $53 billion, said in an interview with Bloomberg Television. ``There's a fair amount of risk aversion taking place, which is why the yen is climbing, and that's going to negatively affect the exporters.''

The Nikkei 225 Stock Average dropped 229.12, or 3 percent, to 7,473.92 as of 9:42 a.m. in Tokyo. The broader Topix index fell 23.33, or 3 percent, to 758.95. For the week, the Nikkei has lost 12 percent, and the Topix has declined 10 percent, the second-biggest weekly slide for both gauges this year.

The Nikkei has fallen by a half this year as the credit crisis triggered by the collapse of the U.S. housing market prompted banks to tighten lending, sparking stock sell-offs.

The Standard & Poor's 500 Index closed at its lowest level in 11 years in New York yesterday, after lawmakers postponed voting on a plan to rescue the auto industry.

Jobless Claims

U.S. first-time jobless claims last week were the highest since 1982, with the exception of a one-week jump in filings in July 1992 caused by layoffs at General Motors Corp. The number of people on benefit rolls rose to 4.012 million, the most since December 1982.

The Bank of Japan will conclude its policy meeting today, with interest rates expected to remain unchanged. The nation's economy will probably shrink this year and next in the first back-to-back contractions since the onset of the banking crisis a decade ago, a Bloomberg survey of economists showed today.

Honda lost 4.8 percent to 1,814 yen. Nidec Corp., the world's biggest maker of hard disk-drive motors, lost 9.8 percent to 3,760 after JPMorgan Chase & Co. lowered its rating on the company. Daihatsu Motor Co., Japan's second-biggest minicar maker, fell 5.7 percent to 726 yen after Merrill Lynch & Co. said failing demand will cause profit to miss the company's estimate this year.

Falling demand as a result of the global slump has forced companies to reduce production or cut prices. Honda will trim production at U.S. plants by 18,000 more cars, bringing total cuts to 50,000 units since August, it said yesterday.

Crude, Yen

Mitsui, Japan's second-biggest trading house, lost 3 percent to 680 yen. Inpex Corp., Japan's biggest oil explorer, dropped 5.3 percent to 433,000 yen, the lowest since listing in 2006.

Crude oil for December delivery plunged 7.5 percent to $49.62 a barrel in New York, the lowest settlement since May 2005. Futures have dropped 66 percent since reaching a record $147.27 on July 11. A measure of six metals traded on the London Metal Exchange sank 3.5 percent to the lowest since July 2005.

The yen climbed to as high as 93.56 against the dollar, a three-week high. Financial market turmoil has caused investors to repay funds borrowed in yen, which carry the lowest interest rates in the developed world, aiding the currency's advance.

Orix retreated 9.7 percent to 5,590 yen. The company said yesterday it will sell l 150 billion yen ($1.57 billion) in convertible bonds to pay back debt. The conversion price, which will be set on Dec. 2 or 3, will be between 1.2 and 1.25 times the share price on that day.

Sumitomo Metal Mining Co., Japan's biggest nickel producer, jumped 2.5 percent to 616 yen after saying yesterday it plans to buy back 2.83 percent of its shares.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net.