Japanese stocks dropped on concern slumping demand and the stronger
local currency will force companies to lower earnings forecasts.
Citizen
Holdings Co. and Seiko Holdings Corp. plunged more than 9 percent after
the watchmakers slashed profit targets. Canon Inc., which last month
predicted its first profit drop in nine years, sank 8.4 percent. JTEKT
Corp., an equipment maker part owned by Toyota Motor Corp., lost 10
percent after orders for machine tools fell the most in more than six
years.
The Nikkei 225 Stock Average declined 272.13, or 3 percent,
to close at 8,809.30 in Tokyo. The broader Topix index fell 27.29, or 3
percent, to 889.36, with all but one of its 33 industry groups falling.
The value of shares traded on the Tokyo exchange was the lowest since
Sept. 1.
Of 922 companies that have reported first-half earnings
through Nov. 10, more than half reduced full-year profit targets,
according to a report by Shinko Research Institute Co.
Citizen,
the biggest maker of mechanical watches by volume, plunged 9.5 percent
after cutting its annual profit forecast by 32 percent. Seiko, the
first maker of quartz watches, plummeted 10 percent to 240 yen, after
slashing its net income estimate by 91 percent. Both companies cited
slumping demand and the stronger yen for the revisions.
Canon, the
world's biggest camera maker, dropped 8.4 percent to 3,150 yen, and
Toyota, which cut its full-year earnings outlook by half last week,
lost 4.9 percent to 3,300 yen.
Iseki & Co., a manufacturer of
agricultural machinery, surged 11 percent to 196 yen, bringing its
two-day gain to 23 percent. The company yesterday posted 690 million
yen ($7 million) in first-half net income after having forecast a loss
for the period.
European stocks fell for the first time in
three days, led by financial shares and commodity producers, on a
worsening profit outlook and drop in oil and metals prices.
Intesa
Sanpaolo SpA slumped 17 percent as Italy's second- biggest bank
scrapped its cash dividend following a 54 percent slide in profit.
Julius Baer Holding AG slipped 4.9 percent after saying assets under
management declined. BHP Billiton Ltd., the world's biggest mining
company, and BG Group Plc, the U.K. gas producer, tumbled more than 9
percent.
Earnings for the 1,246 companies in western Europe that
reported results since Oct. 7 declined 11 percent on average, trailing
expectations by 4.5 percent, Bloomberg data show.
National Markets
National
benchmark indexes fell in all 18 western European markets. The U.K.'s
FTSE 100 sank 3.6 percent, with Taylor Wimpey Plc tumbling 13 percent
as the homebuilder said orders have fallen 40 percent. France's CAC 40
lost 4.8 percent, led by Total SA. Germany's DAX slid 5.3 percent.
Intesa
fell 17 percent to 2.52 euros. Third-quarter profit declined 54 percent
to 673 million euros on lower income from trading and fees.
Allianz
SE, Europe's largest insurer, dropped 8.1 percent to 59.89 euros, the
lowest in more than a week. Swiss Life Holding, the nation's biggest
life insurer, slumped 8.2 percent to 109 francs.
Erste Bank Group
AG, Austria's biggest publicly traded lender, lost 9.5 percent to 17.64
euros after saying it will seek shareholder approval to raise 2.7
billion euros ($3.4 billion) by issuing participation certificates that
will pay annual interest of 8 percent.
BHP, the world's largest
mining company, retreated 9.3 percent to 1,019 pence. Rio Tinto Group,
the third-biggest mining company, lost 8.9 percent to 2,592 pence.
Copper
fell to the lowest in two weeks in New York on speculation that a
deepening slump in the global economy will slash consumption of
industrial metals.
BG Group fell 9.4 percent to 904 pence as crude
oil slumped as much as 6.6 percent to $58.32 in New York. Total SA,
Europe's third-largest oil company, fell 5.2 percent to 40.35 euros.
Stocks
fell on Tuesday as economic fears and concerns over corporate earnings
overshadowed news of a government plan to help prevent foreclosures.
The
S&P 500 was down as much as 3.7%, but pared some losses in the
final two hours of the session to settle with a loss of 2.2%. Nine of
the ten sectors fell in mostly broad-based weakness. The material
sector (-4.2%) declined the most, while the defensive-oriented
utilities sector (+0.2%) outperformed. Volume was below average, with
1.23 billion shares exchanging hands on the NYSE.
Government
officials outlined a new mortgage modification plan for loans held by
GSEs Fannie Mae (FNM 0.69, -0.03) and Freddie Mac (FRE 0.84, -0.04).
The program targets the highest risk borrower who has missed three
payments or more, owns and occupies the property as a primary residence
and has not filed for bankruptcy. The borrower's loan payment will
then be modified to be affordable, which the FHFA defined as no more
than 38% of total monthly gross income.
Earlier in the day,
Citigroup (C 10.85, -0.36) announced a plan to prevent foreclosures,
which includes the modification of mortgage terms for a group of
500,000 homeowners.
In corporate news, American Express (AXP 22.42,
-1.56) received approval to convert into a bank holding company, which
will give it greater access to funding and other measures of the
Federal Reserve. The Fed waived the normal 30-day supervisory period
due to emergency conditions.
Third quarter earnings reports left
investors disappointed. KKR Financial (KFN 1.97, -1.31), Las Vegas
Sands (LVS 5.25, -2.75), Starbucks (SBUX 10.01, -0.19) and TJX (TJX
23.48, -0.22) missed estimates. Rockwell Automation (ROK 25.97, +1.09)
and Tyco (TYC 21.77, -3.57) beat estimates. The latter company,
however, gave downside earnings guidance for its fiscal year 2009,
according to reports.
Meanwhile, analysts are cutting their earnings
estimates on a large number of companies in the face of the uncertain
economic outlook. Google (GOOG 311.29, -7.49) had its 2009 and 2010
earnings estimates reduced at Goldman Sachs due to weak macroeconomic
and consumer data.
GM (GM 2.92, -0.44) and Ford (F 1.80, -0.13) fell
as traders continue to speculate if the automakers will have enough
cash to make it through the economic downturn.
Alcoa (AA 10.91,
-0.87) led material stocks lower after announcing that it will cut
aluminum production by an additional 350,000 metric tons per year, or
8% of annualized output.
In commodity trading, crude prices
plummeted 5.8% to $58.84 per barrel on the belief that the global
economic slowdown will crimp demand. Commodities as a whole fell 3.5%
as the dollar rose 1.4%.
The bond market was closed in observance of Veterans Day. It will reopen for normal trading hours on Wednesday.