Japanese Stocks Fall on U.S. Job Data in Third Weekly Decline

By Masaki Kondo

Oct. 2 (Bloomberg) -- Japanese stocks fell, capping their third-straight weekly slump, after an unexpected drop in the nation’s joblessness rate failed to convince investors the economy is improving.

Sony Corp., which gets 23 percent of its sales from the U.S., and Toyota Motor Corp. retreated at least 3.7 percent after a U.S. government report showed increasing claims for unemployment benefits. Aomori Bank Ltd. tumbled 18 percent as it planned to sell new shares. Nippon Mining Holdings Inc. slid 3.2 percent after metal prices dropped in London.

“The job market is in a terrible state, and consumers’ purse strings are still tied tight,” said Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., which oversees the equivalent of $56 billion. “There seems to be growing consensus that the pace of the recovery will slow.”

The Nikkei 225 Stock Average sank 2.5 percent to close at 9,731.87 in Tokyo. The broader Topix index slipped 2.4 percent to 874.67, with all of its 33 industry groups falling. The Nikkei and the Topix retreated 5.2 percent this week, their third-straight drop for the period.

Shares fell even after the statistics bureau said Japan’s unemployment rate improved to 5.5 percent in August from a record 5.7 percent in July. Household spending increased 2.6 percent in August from a year earlier, while economists had estimated a 0.2 percent decline.

Jobs, Yen

The Nikkei and Topix weekly slumps were their steepest since the five days ended July 10, after Nomura Holdings Inc. announced a record $5.6 billion share sale and a Bank of Japan survey showed companies planned to further cut investment. Both gauges have fallen, while the MSCI Asia Pacific Index has gained since Aug. 31, the day after Japan’s Liberal Democratic Party was routed in national elections, ending its half century of almost unbroken rule.

Sony, the maker of the PlayStation 3 game machine, dropped 5 percent to 2,450 yen. Toyota Motor Corp., which gets 31 percent of its revenue in North America, retreated 3.7 percent to 3,380 yen. Makers of electronics and cars weighed the most on the Topix, followed by banks.

In New York, the Standard & Poor’s 500 Index slid 2.6 percent yesterday, the most since July 2. A U.S. Labor Department report showed the number of Americans filing first- time claims for joblessness benefits increased last week by more than economists had estimated.

The yen appreciated, exacerbating drops in Japanese equities. The currency strengthened to as much as 89.21 per dollar today from 90.07 at the 3 p.m. close of stock trading in Tokyo yesterday. A stronger yen cuts the value of overseas sales at Japanese companies when converted into their home currency.

Aomori Bank

“The world’s economy isn’t up to the mark, so foreign exchange has a bigger influence on exporters’ earnings than usual,” said Mitsubishi UFJ’s Ishigane.

Aomori Bank plunged 18 percent to 298 yen, the sharpest drop since 1979. The bank said yesterday it planned to raise as much as 11.6 billion yen ($130 million) in a sale of new shares. Japan’s three largest banks, Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc., have raised 1.8 trillion yen by selling shares since the end of December.

Nippon Mining fell 3.2 percent to 427 yen. Mitsui Mining & Smelting Co. lost 2.7 percent to 218 yen. A gauge of six metals, including copper, dropped 2.8 percent yesterday in London, breaking a three-day winning streak. Nippon Mining’s metal unit owns 66 percent of Pan Pacific Copper Co., Japan’s biggest smelter of the metal. Mitsui Mining controls the rest.

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