Japan Stocks Fall a Third Day on Sony, Toshiba Earnings Concerns

By Masaki Kondo

Jan. 13 (Bloomberg) -- Japanese stocks dropped for a third day as media reports Sony Corp. and Toshiba Corp. will post losses stoked concern other companies will have disappointing earnings.

Sony, which gets a quarter of its sales from the U.S., was set to drop on a newspaper report it will likely post its first annual operating loss in 14 years. Toshiba Corp. was poised to slump after public broadcaster NHK said the company will record an operating loss. Mitsubishi Motors Corp. lost 3.6 percent after the yen appreciated to the strongest level in almost a month yesterday. Inpex Corp., Japan’s largest oil and gas explorer, was set to slump after oil prices dropped to the lowest level in a month.

“Investor sentiment is swinging from optimism to pessimism as the earnings season kicks in,” Mamoru Shimode, chief equity strategist at Deutsche Bank AG, said in an interview with Bloomberg Television. “With the yen strengthening and people getting bearish about the economic outlook, the media report on Sony will weigh on sentiment.”

The Nikkei 225 Stock Average declined 108.94, or 1.2 percent, to 8,727.86 as of 9:05 a.m. in Tokyo. The broader Topix index fell 19.01, or 2.2 percent, to 836.01. The gauges slumped for a third day, headed for the longest losing streak since Nov. 20.

The yen appreciated against the dollar to as much as 88.88, the strongest level since Dec. 19, from 91.15 at the close of stock trading in Tokyo on Jan. 9. Sony Corp., which expects the U.S. currency to trade at an average of 100 yen in the second half, said in October that every 1 yen change against the dollar alters its annual operating profit by 4 billion yen ($45 million).

Crude oil for February delivery fell 7.9 percent to $37.59 a barrel in New York yesterday, the lowest settlement price since Dec. 24, on concern production cuts by the Organization of Petroleum Exporting Countries will fail to curb a slump in demand. A measure of six metals traded in London dived 4.9 percent, the most in more than a month.

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