Japan Stocks Drop 1st Time This Week on U.S. Car Rescue Concern

By Patrick Rial

Dec. 12 (Bloomberg) -- Japanstocks dropped for the first time this week on concern the global recession will deepen after Senate Republicans prevented passage of a U.S. auto bailout and the nation’s jobless claims soared to a 26-year high.

Toyota Motor Corp., which gets more than half its profit in North America, dropped 5.2 percent. Hino Motors Ltd. sank 7.9 percent after saying it will shutter its truck factory for longer than originally anticipated. Bridgestone Corp., the world’s largest tiremaker by sales, slumped 5.6 percent after oil prices surged the most in five weeks yesterday. The Nikkei 225 Stock Average gained 10 percent in the four days through yesterday after governments from the U.S. to China announced spending plans to stem the global recession.

The Nikkei 225 tumbled 227.55, or 2.6 percent, to 8,493.00 as of 10:35 a.m. in Tokyo. The broader Topix index retreated 13.09, or 1.5 percent, to 835.16, on course for a 6.4 percent weekly gain.

“The market has already taken into account stimulus measures, so now the focus is switching to things such as the jobless numbers,” Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages about $53 billion, said in an interview with Bloomberg Television.

The Nikkei has fallen 44 percent this year as Japan slipped into its first recession since 2001, exceeding the 39 percent slump in 1990 when the nation’s economic bubble burst.

Toyota slumped 5.2 percent to 2,910 yen. Honda Motor Co., Japan’s second-largest automaker, retreated 7.1 percent to 2,040 yen. Hino Motors, Toyota’s truck-making affiliate, tumbled 7.9 percent to 175 yen, after confirming an earlier report by the Nikkei newspaper it would close its Tokyo truck plant for an extra four days next month on falling demand.

Auto Bailout

A $14 billion automaker bailout plan for General Motors Corp. and Chrysler LLC lacks the votes to pass the Senate, as Republicans refused to endorse the package.

“This proposal isn’t nearly tough enough,” Senate Republican Leader Mitch McConnell, a Kentucky Republican, said on the Senate floor. “We simply cannot ask the American taxpayer to subsidize failure.”

Additionally, some of Chrysler’s auto-parts suppliers concerned about losing money in case of a bankruptcy have asked the company to pay up front for orders, according to two people familiar with the matter.

The number of Americans filing first-time claims for unemployment benefits surged to 573,000 last week, the highest level since November 1982.

Bridgestone fell 5.6 percent to 1,458 yen. Smaller rival Sumitomo Rubber Industries Ltd. dropped 3.4 percent to 817 yen. About 60 percent of the material used in tires is oil based, according to the Japan Automobile Tyre Manufacturers Association.

Crude oil for January delivery soared 10 percent to $47.98 a barrel in New York yesterday, the biggest gain since Nov. 4. Ali al-Naimi, the Saudi Arabian oil minister, said yesterday the kingdom cut its output in November in line with curbs agreed to by the Organization of Petroleum Exporting Countries. Previous data showed the country was producing in excess of its target.

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