Japan Stocks Fall on Slump in Machine Orders, U.S. Retail Sales

By Masaki Kondo

Jan. 15 (Bloomberg) -- Japanese stocks declined, headed for the lowest close in more than a month, as bigger-than-estimated drops in machinery orders and U.S. retail sales fueled concern the global recession is deepening.

Fanuc Ltd., world’s largest industrial robot maker, lost 5.6 percent after the nation’s machinery orders plunged in November twice as much as anticipated. Canon Inc., which gets a third of its sales from the Americas, fell 4.8 percent after U.S. retail sales dropped last month at double the rate estimated by economists. Bridgestone Corp. led a retreat by tiremakers after Goldman Sachs Group Inc. recommended selling the stock.

“The U.S. retail report forces investors to consider the risk of a deeper global economic slump,” Juichi Wako, a strategist at Nomura Securities Co., Japan’s biggest brokerage, said in an interview with Bloomberg Television. “It’s become even harder to foresee what lies ahead.”

The Nikkei 225 Stock Average declined 364.97, or 4.3 percent, to 8,073.48 as of 9:34 a.m. in Tokyo. The broader Topix index fell 25.59, or 3.1 percent, to 793.80, with nine stocks slumping for each that rose. The gauges were set for the lowest close since Dec. 5.

Japan’s machinery orders, an indicator of capital spending in the next three to six months, fell by a record 16.2 percent in November from the previous month, the Cabinet Office said today before markets opened. Economists had estimated an 8 percent drop. The report came after the Japan Machine Tool Builders’ Association said yesterday that machine tool orders tumbled 72 percent in December from a year earlier.

U.S. Sales

Fanuc lost 5.6 percent to 5,580 yen, set for the lowest close since Dec. 12, and Komatsu Ltd., the world’s second- biggest maker of earthmoving equipment, dived 4.8 percent to 1,085 yen. Closest domestic rival Hitachi Construction Machinery Co. sank 6.8 percent to 1,031 yen.

Canon, the world’s biggest maker of digital cameras, retreated 4.8 percent to 2,805 yen, while Sony Corp., which gets a quarter of its sales from the U.S., slid 3.8 percent to 2,010 yen. Electronics makers weighed the most on the Topix.

U.S. retail sales dropped for a sixth month with a 2.7 percent slump in December, the longest stretch of declines since the tallies began in 1992, the Commerce Department said yesterday. Economists had estimated a 1.2 percent fall.

Bridgestone tumbled 7.1 percent to 1,240 yen, and Yokohama Rubber Co. declined 9.8 percent to 367 yen. Sumitomo Rubber Industries Ltd. fell 8.5 percent to 639 yen. Goldman slashed its ratings on the tiremakers to “sell,” citing a “clear decline” in demand.

Nikkei futures expiring in March retreated 3.5 percent to 8,080 in Osaka and slumped 3.9 percent to 8,070 in Singapore.

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