Japanese Stocks Decline Third Day as U.S. Economic Growth Misses Forecast

By Norie Kuboyama and Masaaki Iwamoto - Jan 30, 2012 8:43 AM GMT+0700

Japanese stocks fell for a third day after the U.S. economy expanded less than forecast in the fourth quarter, dimming the earnings outlook for Asia’s exporters.

Sony Corp. (6758), which depends on the U.S. for a fifth of its sales, fell 0.9 percent. Nippon Electric Glass Co. tumbled 9.3 percent after saying profit may fall by more than half. Nippon Yusen K.K. and Mitsui O.S.K. Lines Ltd. slid after a report the shipping lines may post losses amid falling cargo rates. Mitsubishi Electric Corp., which last week said it overcharged the government on contracts, dropped the most on the Nikkei 225 Stock Average.

“The U.S. growth number was below forecast and that’s a negative,” said Toshiyuki Kanayama, a market analyst at Tokyo- based Monex Group Inc. “The market looks overheated, so investors are likely to use the report as an excuse to sell.”

The Nikkei 225 fell 0.3 percent to 8,817.21 as of 10:17 a.m. in Tokyo, headed for a one-week low. The broader Topix (TPX) lost 0.1 percent to 760.44. The 25-day Toraku (TORAKU) index, an indicator of market momentum, exceeded 120 for a third consecutive day, a level that suggests the market may be poised to fall.

The Topix (TPX) has advanced 4.4 percent this year, rebounding from last year’s 19 percent drop, amid signs the U.S. economy is improving. Shares on the index trade for an average of 0.9 times book value, compared with 2.2 times for the Standard & Poor’s 500 Index. A number less than one means that companies can be bought for less than value of their assets

U.S. GDP

Futures on the S&P 500 Index slipped 0.5 percent today. The gauge lost 0.2 percent in New York on Jan. 27 after a report showed U.S. gross domestic product, the value of all goods and services produced, expanded less than analysts forecast.

Sony lost 0.9 percent to 1,402 yen. Kyocera Corp. (6971), an electronic components maker that derives more than half of its sales outside Japan, slipped 1.5 percent to 6,400 yen.

The world’s biggest economy grew at a 2.8 percent annualized rate in the three months through December, compared with a forecast for a 3 percent increase. Growth accelerated from 1.8 percent in the previous quarter.

European Union leaders gather today in Brussels for their first summit of 2012 where they will put the finishing touches on a German-led deficit-control treaty and endorse a 500 billion-euro ($661 billion) rescue fund to be set up this year.

Greek Debt Deal

Greece and its private creditors said Jan. 28 they expect to complete a deal in coming days after bondholders signaled they would accept European government demands for a bigger cut in their debt holdings.

Glass makers declined the most among the Topix’s 33 industry groups. Nippon Electric Glass tumbled 9.3 percent to 675 yen after forecasting profit may fall by at least 54 percent to 31.5 billion yen ($410 million) for this fiscal year on slumping glass demand.

Shipping companies also declined after the Nikkei newspaper reported Japan’s three largest lines may post pretax losses for the year ending March as sluggish demand in Europe and Asia pushes down cargo fees. Nippon Yusen, the country’s biggest shipper, slipped 1.5 percent to 192 yen. Mitsui O.S.K. lost 2.1 percent to 285 yen and Kawasaki Kisen Kaisha Ltd. fell 1.4 percent to 142 yen.

Mitsubishi Electric dropped the most on the Nikkei 225 (NKY) after Japan barred it from bidding on projects until it refunds the government for overcharges. The company, which makes satellites equipment and electronics, last week said it billed the government too much on aerospace and defense contracts. The stock fell 12 percent to 670 yen.

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Masaaki Iwamoto in Tokyo at miwamoto4@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net