Most Japanese Stocks Fall, Led by Mitsubishi on Oil Drop

By Patrick Rial

July 16 (Bloomberg) -- Most Japanese stocks fell for a fourth day, led by commodities producers, after oil posted its biggest decline in four months yesterday amid signs higher prices and slowing growth are curbing demand.

Mitsubishi Corp., Japan's largest trading company, sank the most in two weeks, while oil explorer Inpex Holdings Inc. fell to the lowest in two months. Japan Airlines Corp., which forecast a 23 percent jump in fuel costs this year, and Nippon Paper Group Inc. led gains among airlines and papermakers on speculation their costs will be reduced by declining fuel prices.

``The drop in oil is either a boon or bane depending on your line of business,'' said Kenji Tomida, who oversees $16 billion as chief fund manager at T&D Asset Management Co. in Tokyo. ``Oil has been bid up beyond levels supported by global demand and a correction is natural.''

The Nikkei 225 Stock Average dropped 6.28, or 0.1 percent, to 12,748.28 as of 1:03 p.m. in Tokyo after gaining as much as 0.5 percent. The broader Topix index slumped 2.65, or 0.2 percent, to 1,250.47. About three stocks dropped for every two that gained on the benchmark.

Japan's Topix has lost 15 percent this year amid slowing global growth and financial market uncertainty. Still, the nation's benchmark has outperformed Asia's 10 largest markets.

Crude oil fell 4.4 percent to $138.74 yesterday, its steepest percentage decline since March 19. U.S. gasoline demand decreased 5.2 percent last week, a 12th-straight drop that signaled record pump prices are changing driving habits, a MasterCard Inc. report showed.

Airlines, Chipmakers

Oil also tumbled after Federal Reserve Chairman Ben S. Bernanke said there are ``significant downside risks to the outlook for growth,'' abandoning language from an April statement that said risks to economic growth have diminished.

Mitsubishi, which generated 60 percent of its profit from commodities last year, dropped 3.4 percent to 3,160 yen, the most since July 3. Inpex, Japan's biggest oil explorer, lost 4.8 percent to 1.18 million yen, the lowest since May 2.

Japan Airlines, Asia's biggest carrier, gained 1.4 percent to 213 yen, and rival All Nippon Airways Co. added 1.6 percent to 390 yen. Nippon Paper Group Inc. jumped 3.3 percent to 281,000 yen, its best performance in two months.

Elpida Memory Inc., Japan's largest memory chipmaker, added 3.2 percent to 3,200 yen. Advantest Corp., the world's biggest maker of equipment used to test computer memory chips, rose 2 percent to 2,260 yen.

Intel Corp., the world's biggest chipmaker, reported a 25 percent increase in second-quarter profit and gave a sales forecast that topped analysts' estimates after demand grew worldwide for personal-computer processors.

U.S. Demand

Toyota Motor Corp., the world's largest automaker by value, dropped 0.4 percent to 4,660 yen after Japan's public broadcaster NHK said the company will cut its global sales target this year by 3.6 percent as rising gasoline prices and a weaker U.S. economy curb demand for its vehicles.

Denso Corp. slid 1.9 percent to 3,190 yen. The nation's largest auto parts maker may lower its sales forecast by up to 2 percent as car demand weakens, Chief Executive Nobuaki Katoh said yesterday.

Fishing companies jumped after a one-day strike yesterday by the nation's 250,000 fishermen who called for government aid to cope with rising fuel prices

Nippon Suisan Kaisha Ltd., the nation's biggest fishery by market value, rose 2.5 percent to 488 yen. Rival Maruha Nichiro Holdings Inc. gained 1.9 percent to 165 yen. The Topix Fishery, Agriculture & Forestry Index, which includes the companies among its five members, is the only gainer this year among 33 industry groups on the Topix.

Nikkei futures expiring in September were unchanged at 12,750 in Osaka and lost 0.2 percent to 12,760 in Singapore.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net.