Nissan Leads Car Shares Lower on U.S. Economy Outlook

By Makiko Kitamura

Nov. 21 (Bloomberg) -- Nissan Motor Co., Japan's third- largest carmaker, led auto shares lower in Tokyo after U.S. unemployment claims surged to the highest since 1992, worsening the outlook for exports.

Nissan dropped as much as 24 yen, or 7.3 percent, the most in two weeks, to 303 yen, and traded at 322 yen as of 1:03 p.m. The shares have plunged 74 percent this year. Toyota Motor Corp., Japan's biggest carmaker, fell as much as 3.6 percent to 2,840 yen, bringing its market capitalization below 10 trillion yen for the first time since 2003.

Japan's three biggest carmakers traditionally earn at least half of their operating profit in the U.S., the world's largest auto market. Industrywide car sales are headed for the worst year since 1991 as banks cut back on lending and unemployment rises.

``It doesn't look like car sales will improve as the economy is getting worse,'' said Mitsuo Shimizu, a market analyst at Cosmo Securities Co. in Tokyo.

``Drowning in Debt''

Initial jobless claims climbed to a higher-than-forecast 542,000 in the week ended Nov. 15, the Labor Department said yesterday in Washington. The Conference Board's index of leading economic indicators declined 0.8 percent, and a measure of manufacturing in the Philadelphia region fell to an 18-year low.

Bank of America Corp. Chief Executive Officer Kenneth Lewis, who heads the biggest U.S. retail bank, said yesterday the nation is ``drowning in debt.''

A stronger yen is also eroding the value of the carmakers' overseas sales. Japan's currency headed for a third weekly gain against the dollar, trading at 94.16 yen against the U.S. currency.

Japanese carmakers are cutting jobs and output as sales decline. Honda Motor Co., Japan's second-largest carmaker, said yesterday it is trimming production plans at U.S. factories by an additional 18,000 units. Honda has cut a total of 50,000 units from its U.S. plans since August.

Honda declined 1.9 percent to 1,869 yen. Daihatsu Motor Co. Japan's largest minicar-maker, fell as much as 7.1 percent. Mazda Motor Corp. dropped as much as 6.8 percent.

To contact the reporter on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net.