Japanese Stocks Slip as Higher Commodities Prices Boost Costs

By Patrick Rial

Dec. 11 (Bloomberg) -- Japanese stocks fell, headed for the first drop in four days, as a climb in raw materials prices dimmed the earnings prospects of tiremakers and airlines.

Bridgestone Corp., the world’s No. 1 tiremaker by sales, fell 2.7 percent on speculation materials costs will rise after Russia signaled it may coordinate an oil output cut with OPEC next week. Toyota Motor Corp. lost 1.7 percent on concerns it may be forced to lower its dividend and as Senate Republicans yesterday voiced opposition to a rescue for General Motors Corp. and Chrysler LLC. Sumitomo Mitsui Financial Group Inc., Japan’s No. 2 bank by market value, dropped 2.6 percent after a newspaper report the bank will raise more capital than originally forecast.

The Nikkei 225 Stock Average lost 110.29, or 1.3 percent, to 8,549.95 as of 9:41 a.m. in Tokyo. The broader Topix index dropped 5.61, or 0.7 percent, to 828.94.

“Oil prices are being supported by bets that OPEC will be able to halt the market rout,” Juichi Wako, a Tokyo-based strategist at Nomura Securities Co., said in an interview with Bloomberg Television. “The direction of the auto bailout has become harder to read. This problem will continue to determine the bearing of the stock market.”

Energy Minister Sergei Shmatko said Russia will announce proposals for reducing production by Dec. 17, when the Organization of Petroleum Exporting Countries meets, Interfax said. The group, source of more than 40 percent of the world’s oil, may trim output by as much as 2.5 million barrels a day next week, billionaire hedge-fund manager Boone Pickens said Dec. 9.

U.S. Republican Senator George Voinovich said there likely aren’t enough supporters in his party to pass a $14 billion auto bailout package. GM has said that it may not survive into 2009 without immediate aid.

Commodities Climb

Bridgestone fell 2.7 percent to 1,495 yen. Nippon Paper Group Inc., the country’s largest paper producer, lost 1.2 percent to 342,000 yen. All Nippon Airways Co., Asia’s second- biggest airline, slipped 0.9 percent to 336 yen.

Crude oil for January gained 3.4 percent to $43.52 a barrel in New York yesterday, and climbed as much as 1.7 percent in trading today. Copper futures rallied 3.6 percent, while gold gained 4.5 percent.

Toyota dropped 1.7 percent to 2,880 yen. The carmaker may cut auto production by 1 million units, Japan’s national broadcaster NHK said. The company may also be forced to cut its dividend payment as the projected payout of 235 billion yen ($2.53 billion) is lower than the 57 billion yen Toyota expects to earn in the second half of the fiscal year.

Sumitomo Mitsui lost 2.6 percent to 304,000 yen. The lender will raise 700 billion yen in new capital through preferred share sales, up from a previous plan to boost capital by 400 billion yen, the Nikkei newspaper reported.

Japan Tobacco Inc., the world’s third-biggest listed maker of cigarettes, surged 4.9 percent to 323,000 yen after the Asahi newspaper said the government may abandon a plan to raise tobacco taxes.

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