Japan Stocks Fall as Developer Default Sparks Financial Concern
Japan's stocks fell, sending the benchmark index to its longest
losing streak this year, on mounting doubts about the financial health
of developers and consumer-finance companies.
Mitsui Fudosan Co. sent real-estate companies lower after a smaller
rival filed for bankruptcy, while consumer lender Aiful Corp. tumbled
to the lowest in a decade. Central Japan Railway Co. led a surge in
train lines on speculation they'll benefit from a shift to
fuel-efficient transportation amid rising oil prices.
Suruga Corp., a Yokohama-based condominium developer, filed for
bankruptcy protection yesterday, with debt at four times its capital.
The stock tumbled 40 percent to 121 yen, less than a 10th of its value
at the end of 2007.
Mitsui Fudosan, the nation's largest developer, dropped 1.5 percent to
2,350 yen. Rival Mitsubishi Estate Co. lost 2.2 percent to 2,500 yen,
while Sumitomo Realty & Development Co. fell 2.8 percent to 2,230
yen.
Urban Corp., a developer that had its debt cut to a speculative level
earlier this month, fell 15 percent to 358 yen, the lowest since
September 2004.
Aiful, Japan's largest consumer finance company by assets, may be
insolvent on a parent basis, Lehman Brothers Holdings Inc. said on June
23. The shares plummeted 11 percent to 1,345 yen, extending yesterday's
5.9 percent drop, to the lowest since Aiful's Tokyo listing in 1998.
Rival Takefuji Corp. plunged 7.5 percent to 1,611 yen after UBS AG cut
its 12-month price estimate by a third.
Consumer-finance companies were the biggest losers among 33 industry groups on the Topix, followed by developers.
Japan's monthly wages fell six times in the past 12 months to April 30,
according to figures compiled by the Labor Ministry, and household
spending fell the most in 19 months in April.
A train loaded with a 10-ton cargo emits 142 kilograms of carbon
dioxide between Tokyo and Osaka, a fourth of that put out by comparable
transportation by truck, according to data by Nippon Express Co.
Asahi Glass Co., Asia's largest glassmaker, added 2.2 percent to 1,336
yen. The company is in talks with automakers to raise prices on car
windows by a 10th to pass on material and fuel costs, it said today,
confirming an earlier report by the Nikkei newspaper.
Nippon Electric Glass Co. jumped 3.3 percent to 1,983 yen, while Central Glass Co. soared 5.4 percent to 429 yen.
European Stocks Rise, Led by Nokia, Barclays, Punch Taverns
European stocks rose as one of Nokia Oyj's biggest suppliers said
mobile-phone demand is strengthening and European Central Bank
President Jean-Claude Trichet said he hasn't signaled a series of
interest-rate increases.
Nokia had its biggest gain since April after Jabil Circuit Inc. posted
a six-fold surge in profit. Barclays Plc climbed the most in two months
as the U.K. bank said it was selling shares to institutions in China,
Qatar, Singapore and Japan. Daimler AG and Ryanair Holdings Plc led
carmakers and airlines higher as crude oil slumped in New York.
National indexes rose in all 18 western European markets. The U.K.'s
FTSE 100 gained 0.6 percent. France's CAC 40 added 1.4 percent, and
Germany's DAX increased 1.3 percent.
Nokia, the world's biggest maker of mobile phones, climbed 6.7 percent
to 16.78 euros. Jabil said revenue for the fourth quarter will be $3.2
billion to $3.3 billion and per-share profit excluding some items will
be 29 cents to 33 cents. Analysts projected sales of $3.19 billion and
profit before some items of 28 cents, on average.
Net income for the earlier period that ended May 31 rose to 19 cents a share from 3 cents a year earlier.
Barclays rose 6.5 percent to 331 pence. The U.K.'s fourth- largest bank
by market value said it will raise about 4.5 billion pounds ($8.9
billion), selling shares to Qatar Investment Authority, Challenger,
Temasek Holdings Pte, China Development Bank, Sumitomo Mitsui Financial
Group Inc. and Barclays shareholders.
Bank stocks are the worst-performing industry in Europe this year as
writedowns, credit losses and slowdown in the housing market erode
earnings. Banks have raised about $305 billion to help cover losses
since the collapse of the U.S. mortgage market. The Stoxx Banks Index
closed yesterday at its cheapest in three months.
Royal Bank of Scotland Group Plc, the U.K.'s second-biggest bank,
climbed 4.6 percent to 229.25 pence. UBS AG, the European bank with the
most losses from the U.S. subprime collapse, gained 5 percent to 23.94
Swiss francs.
Daimler, the world's second-largest maker of luxury cars, added 1.5
percent to 42.48 euros. Ryanair, Europe's biggest low- cost carrier,
gained 6.6 percent to 3.06 euros. Air France-KLM Group, the region's
largest airline, increased 4 percent to 16.26 euros.
ABB Ltd., the world's largest builder of power networks, fell 2.6
percent to 30.18 Swiss francs after U.S. rival Rockwell Automation Inc.
said full-year earnings will be less than its profit forecast.
U.S. stocks retreated to a three- month low after consumer confidence
weakened and United Parcel Service Inc. said rising fuel costs will
reduce profit.
UPS, the biggest package shipment company,
tumbled the most in almost two years after predicting second-quarter
earnings below analyst estimates. Dow Chemical Co.,
the largest U.S. chemical producer, slumped to the lowest since March
as Deutsche Bank AG cut profit estimates. Prospects that the worsening
outlook for the economy may forestall interest-rate increases helped
financial shares rebound from the lowest level since 2003.
UPS lost $4, or 6 percent, to $62.26, an
almost-five-year low. Earnings will be 83 cents to 88 cents a share,
down from the range of 97 cents to $1.04 projected on April 23, the
company said. The average estimate of 16 analysts surveyed by Bloomberg
was 98 cents.
Raw-materials producers fell the most among 10 S&P 500 industries, losing 2.5 percent.
Dow slid $1.04, or 2.8 percent, to $36.58. David
Begleiter, a New York-based analyst at Deutsche Bank, reduced his
second- quarter and full-year earnings estimates for Dow because of
rising costs and ``signs of demand destruction in the U.S.'' Dow said
it will raise prices as much as 25 percent in July, the largest
increase in company history and the second in two months, to recoup
surging energy and raw-material costs.
Freeport-McMoRan Copper & Gold Inc., the world's
second- largest producer of copper, fell as the metal retreated for a
second day on concern slowing global growth will reduce demand.
Freeport-McMoRan lost $2.83 to $115.72.
U.S. stocks rose, sending the Standard & Poor's 500
Index to its best gain in two weeks, after the Federal Reserve said
risks to economic growth have diminished and gave no indication it will
raise interest rates anytime soon.
Bank shares erased most of an earlier rally, limiting the market's
jump, on the central bank's assessment that ``financial markets remain
under considerable stress.'' Apple Inc., General Electric Co. and
Wal-Mart Stores Inc. helped lead the advance as the Fed said the
economy is still expanding. Jabil Circuit Inc., the maker of mobile
phones for Nokia Oyj, climbed the most in six years after forecasting
earnings that topped analysts' estimates.
The S&P 500 rebounded from a three-month low as 21 of 24 industries
in the index advanced. The Fed left its benchmark lending rate at 2
percent, ending the most aggressive series of rate cuts in two decades,
and said it expects inflation to moderate through next year.