Japan Mining Stocks Slump on Lower Oil; Kao, Bridgestone Jump

By Masaki Kondo

Dec. 5 (Bloomberg) -- Japan mining stocks slumped after oil sank to the lowest level in almost four years and Merrill Lynch & Co. said it may decline further. Rubber and chemical makers gained on speculation their production costs will fall.

Inpex Corp. and Japan Petroleum Exploration Co., Japan’s largest oil explorers, dropped as much as 2.7 percent. Soap maker Kao Corp. climbed 2.7 percent, while Bridgestone Corp., the world’s biggest tiremaker, rebounded 1.4 percent from a five-year low. Fukuoka Financial Group Inc. lost 4.3 percent after Goldman Sachs Group Inc. recommended selling the stock.

The Nikkei 225 Stock Average swung between gains and losses, and was up 13.81, or 0.2 percent, to 7,938.05 as of 9:59 a.m. in Tokyo. The broader Topix index dipped 0.52, or 0.1 percent, to 788.36. The Nikkei headed for a 6.8 percent weekly drop, while the Topix was set to lose 5.6 percent. Almost the same number of stocks fell as rose on the Topix.

Oil has retreated 70 percent from a record $147.27 a barrel on July 11 as expectations evaporated that demand in emerging markets would persist as developed economies slowed. Merrill Commodity Strategist Francisco Blanch yesterday said oil may slide below $25 a barrel next year if the global recession spills over into China.

Inpex retreated 2.3 percent to 512,000 yen, while Japan Petroleum lost 2.7 percent to 3,240 yen. Sumitomo Metal Mining Co., Japan’s No. 2 copper smelter, slipped 1.8 percent to 749 yen, extending its losing streak to a fifth day.

Crude oil for January delivery fell 6.7 percent yesterday to $43.67, the lowest settlement price since January 2005. Copper futures for March delivery fell for a fifth day, losing 5.5 percent to the lowest close since May 2005.

Positive Side

Kao advanced 2.7 percent to 2,865 yen, while Bridgestone added 1.4 percent to 1,375 yen. Mitsubishi Paper Mills Ltd. gained 3 percent 173 yen.

“It’s high time we thought about the positive side of falling oil prices,” Yoshinori Nagano, a senior strategist at Tokyo-based Daiwa Asset Management Co., which manages about $96 billion, said in an interview with Bloomberg Television.

Fukuoka, Japan’s second-largest regional bank by assets, dived 4.3 percent to 292 yen, after Goldman cut its rating to “sell” from “neutral.” Market leader Mitsubishi UFJ Financial Group Inc. slid 5.2 percent to 436 yen, and Mizuho Financial Group Inc., Japan’s second-biggest listed bank, dropped 4.8 percent to 215,100 yen.

Nikkei futures expiring in December added 0.8 percent to 7,940 in Osaka and slumped 0.3 percent to 7,945 in Singapore.

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