Japan's Stocks Decline on Economic Outlook; Kobe Steel Tumbles

By Masaki Kondo

Nov. 6 (Bloomberg) -- Japanese stocks dropped for the first time in three days as worse-than-expected economic statistics in the U.S. overshadowed expectations President-elect Barack Obama will enact new measures to boost the world's largest economy.

Sony Corp., which gets a quarter of its sales from the U.S., and Toyota Motor Corp. were poised to fall. Kobe Steel Ltd. declined 5.8 percent after ArcelorMittal forecast earnings will decline by about a half in the fourth quarter.

The Nikkei 225 Stock Average declined 265.55, or 2.8 percent, to 9,255.69 as of 9:09 a.m. in Tokyo. The broader Topix index fell 26.63, or 2.8 percent, to 940.28. In New York, the Standard & Poor's 500 Index slumped 5.3 percent, the most in two weeks.

``Now that the U.S. election is over, investors' attention has returned to the deteriorating outlook for the global economy,'' Mitsushige Akino, who oversees the equivalent of $468 million at Tokyo-based Ichiyoshi Investment Management Co., said in an interview with Bloomberg Television.

Yesterday, the Nikkei climbed 4.5 percent, extending its rebound to 33 percent from a 26-year low on Oct. 27, as expectations grew that Obama will take additional measures to spur U.S. economic growth.

Service industries in the U.S. contracted the most on record to 44.4 last month, below the 47 estimated by economists, according to a report from the Institute for Supply Management. Meanwhile, U.S. companies cut 157,000 jobs in October, the most since November 2002 and bigger than an estimated drop of 102,000, according to ADP Employer Services.

Steel Production

ArcelorMittal, the world's biggest steelmaker, yesterday forecast an earnings decline of as much as 48 percent in the fourth quarter and said it will cut global output by more than 30 percent. The announcement coincided with a Nikkei English News report that JFE Holdings Inc., Japan's second-largest steelmaker, has proposed a 10 percent price increase in plate steel for ships.

Crude oil for December delivery fell 7.4 percent to $65.30 a barrel in New York yesterday, the biggest drop since Oct. 10, as gasoline inventories rose in the U.S. Copper futures for December delivery fell 7.1 percent.

Meanwhile, the Japanese currency appreciated to as much as 97.77 per dollar from 99.58 at the close of stock trading in Tokyo yesterday, reducing the value of repatriated sales of Japanese companies. The yen strengthened against the euro to as much as 126.35 from 128.14.

Nikkei futures expiring in December retreated 5.3 percent to 9,020 in Osaka and slumped 5.5 percent to 9,025 in Singapore.

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