Japan Stocks Fall a 3rd Day on Demand Concern; Developers Rise

By Masaki Kondo

March 10 (Bloomberg) -- Japanese stocks fell for a third day on concern shrinking global demand and rising fuel prices will weigh on company earnings.

Sony Corp., which gets a quarter of its sales from the U.S., lost 2.3 percent after billionaire investor Warren Buffett said the U.S. economy “has fallen off a cliff.” Tokyo Electric Power Co. dropped 3.6 percent after crude prices rose, raising the utility’s operating costs. Takeda Pharmaceutical Co. fell 3.9 percent, extending yesterday’s 13 percent drop on concern U.S. approval of its diabetes drug will be delayed. Mitsui Fudosan Co. rose 2.2 percent, leading a rally by real estate companies from a near six-year low.

The Nikkei 225 Stock Average retreated 31.05, or 0.4 percent, to close at 7,054.98 in Tokyo, the lowest since Oct. 6, 1982, and bringing its three-day drop to 5.1 percent. The broader Topix index fell 7.03, 1 percent, 703.50.

“The global economy is in a much worse state than initially thought, and companies can’t seem to shed inventory at the rate people had hoped,” said Naoki Fujiwara, chief fund manager at Tokyo-based Shinkin Asset Management Co., which oversees about $6.1 billion. Developers and financial companies “have been oversold, even though the nation’s banking system is relatively unscathed.”

Nikkei members traded at 0.81 times average net worth as of yesterday, the lowest level on record dating back to July 1989, according to index compiler Nikkei Inc. The measure has fallen by a fifth this year as the World Bank predicts the global economy will contract for the first time since World War II.

Buffett, whose Berkshire Hathaway Inc. posted its worst results ever in 2008, yesterday said the U.S. economy “can’t turn around on a dime,” and efforts to stimulate recovery may lead to inflation higher than in the 1970s. Americans are fearful and changing their buying habits, he said during an appearance on the CNBC television network.

Crude oil for April delivery jumped 3.4 percent to $47.07 a barrel in New York yesterday, the highest settlement since Jan. 6. A $1 change in a barrel of crude alters Tokyo Electric’s annual fuel costs by 17 billion yen ($172 million), the company said in January. The oil contract added 0.2 percent today.

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