Japan Stocks Fall on Stronger Yen; Oil, Mining Companies Jump
Japan's stocks fell to the lowest in more than two months after a
stronger yen clouded earnings prospects for makers of electronics and
cars. Oil explorers and mining companies advanced as commodities prices
rose.
Fuji Heavy Industries Ltd., the maker of Subaru cars, led a decline by
automakers, while Sony Corp. fell to the lowest in almost two months as
the Japanese currency climbed to a three- week high. Nippon Oil Corp.
and Nippon Mining Holdings Inc., Japan's largest copper producer,
surged.
The Nikkei lost 6 percent this month and 12 percent so far this year,
its worst first half since 1995. The Topix slumped 6.3 percent in June
and 11 percent on the year.
The yen strengthened to as much as 105.88, a level not seen since June
6, from 107.09 when Japanese stock trading ended on June 27. Moody's
Investors Service raised Japan's local-currency debt rating at midday,
sending the Japanese currency higher and helping reverse a 0.8 percent
gain in the Topix. A stronger yen decreases the value of overseas sales
of Japanese companies.
Fuji Heavy tumbled 4.6 percent to 520 yen, the sharpest drop since March 17, while Sony,
which derives a quarter of its sales from the U.S., sank 4.1 percent to
4,640 yen, the lowest since May 9. Hino Motors Ltd., which today said
it will raise prices on trucks for the first time in almost 17 years,
slid 1.8 percent.
Nippon Oil, which develops oil fields in the North
Sea, leapt 7.4 percent to 713 yen, making it the second-biggest winner
on the MSCI World Index. Nippon Mining jumped 3.6
percent to 665 yen, while Mitsubishi Corp., a trading company that
derives half its profit from commodities, added 3.2 percent to 3,500
yen.
Tokyo Electric Power Co., Asia's largest utility, climbed 3.8 percent to 2,730 yen, the sharpest jump since Jan. 25. Kansai Electric Power Co. added 3.8 percent and Tohoku Electric Power Co. surged 5 percent. A gauge tracking utilities had its biggest gain since April 1.
Tokyo Electric may raise electricity rates in January
to cope with higher fuel prices, President Masataka Shimizu said on
June 26, sending the shares up the following day. Kansai Electric and
other utilities may follow in raising consumer prices, Kyodo News
reported on June 27.
Sony Financial Holdings Inc., which provides
insurance and online banking, tumbled 4 percent to 427,000 yen, while
Millea Holdings Inc., Japan's largest insurance company by market
value, dropped 2.6 percent to 4,140 yen. The Topix Insurance Index was
the biggest decliner among 33 industry groups, falling to its lowest
since April 24.
The yield on Japan's 10-year government bond fell to as much as 1.585
percent today, the lowest since May 13. Japanese insurers have large
holdings of government bonds, and lower yields decrease their returns.
Government securities make up more than a fifth of Millea's assets,
according to the company.
European Stocks Rise, Led by BP, Anglo American, France Telecom
BP Plc and Anglo American Plc climbed after crude topped $143 a barrel
and gold had its fourth straight quarterly gain. Nestle SA, the world's
biggest food company, and Roche Holding AG, the largest maker of cancer
medicines, led an advance by companies whose earnings are less tied to
the pace of economic growth. France Telecom SA rallied after Europe's
third-biggest telephone company ended its bid for TeliaSonera AB.
Record oil ``is a boon for energy companies,'' said Franz Wenzel,
Paris-based deputy director for investment strategy at AXA Investment
Managers, which oversees about $831 billion. We're also ``saying play
the defensives. We see the possibility to pass on the inflation burden
to the consumer,'' he said.
More than $9.2 trillion was erased from equity markets worldwide this
year through last week as $400 billion in bank credit-related losses
and oil at all-time highs offset efforts by central banks to bolster
confidence in financial markets.
Inflation in Europe accelerated more than economists forecast this
month to 4 percent, the highest in more than 16 years, the European
Union statistics office said today.
European Central Bank President Jean-Claude Trichet this
month signaled the ECB may raise rates as soon as this week. The Fed on
June 25 kept rates on hold, saying ``upside risks'' to prices have
increased.
BP, Europe's second-largest oil company, gained 3.2 percent to 583.25 pence. Total SA, the region's biggest refiner, increased 2.4 percent to 54.20 euros.
Anglo American, the world's second-biggest mining
company, added 3.8 percent to 3,526 pence. BHP Billiton Ltd., the
third- largest, rose 2.4 percent to 1,920 pence.
Earnings momentum for European pharmaceutical companies will continue,
Gbola Amusa, a London-based analyst at UBS AG, wrote in a report to
clients.
France Telecom jumped 7.2 percent to 18.71 euros. The
French company withdrew its unsolicited bid to buy TeliaSonera for 244
billion kronor ($40.8 billion) after the Swedish company rejected the
offer as too low.
Societe Generale SA raised its recommendation on France Telecom to
``buy'' from ``hold,'' saying withdrawing its takeover bid should
``reassure investors as to the group's prudent financial approach to
mergers and acquisitions.''
Holcim Ltd. sank 1.3 percent to 82.75 francs. Exane
BNP Paribas downgraded the world's second-largest cement maker on
concern demand will slow, cutting its recommendation to ``neutral''
from ``outperform.''
Kingspan Group Plc sank 2.9 percent to 6.167 euros.
Europe's largest maker of flooring and insulation panels was also
lowered to ``neutral'' from ``outperform'' at Exane. Imerys SA dropped
4.2 percent to 46.01 euros. The world's biggest producer of minerals
used to whiten paper and add colors to paint had its recommendation
lowered to ``underperform'' from ``neutral.''
``Construction leading indicators have continued to decline in the U.S.
and most West European countries and imply a further fall in demand for
building materials in 2009,'' the brokerage wrote in a note.
Most U.S. stocks fell for a third day, capping the
market's worst month in six years, on concern that deepening mortgage
losses will force more banks to cut dividends or sell shares at a
discount.
Wachovia Corp. tumbled to the lowest since 1992 after an analyst said the lender may cut its payout, while Merrill Lynch & Co. and Citigroup Inc.
dropped as JPMorgan Chase & Co. said prices for some mortgage
securities may sink further. Lehman Brothers Holdings Inc. plunged as
traders speculated the fourth- largest U.S. securities firm may be sold
for less than its market value. Devon Energy Corp.
led gains in oil producers, which sent the Standard & Poor's 500
Index and Dow Jones Industrial Average higher, after analysts increased
profit estimates through 2009.
Three stocks dropped for every two that rose on the New York Stock
Exchange. The S&P 500 increased 1.62 points, or 0.1 percent, to
1,280, paring its retreat this month to 8.6 percent. The Dow added 3.5
to 11,350.01. The Nasdaq Composite Index lost 22.65, or 1 percent, to
2,292.98.