Japan's stocks fell, led by developers and insurance companies, on
concern the slowing economy will reduce property demand and push up
securities losses on company balance sheets.
The Nikkei 225
Stock Average broke 194.17, or 2.3 percent, to close at 8,328.41 in
Tokyo, breaking a two-day gain. The broader Topix index slid 15.05, or
1.8 percent, to 835.44, with 22 of its 33 industry groups dropping.
Sony Financial Holdings Inc., operator of Japan's fifth-largest insurer
by value, dropped 9.2 percent after first-half earnings fell by more
than a quarter.
Japan's three biggest banks, including Mitsubishi UFJ Financial Group
Inc., cut by more than half their full-year earnings forecasts in the
past month as bad-loan costs rose. Tighter bank lending has contributed
to 21 bankruptcies among Japan's property stocks this year, with the
Dix Kuroki Co. becoming the latest failure last week.
The
government confirmed yesterday Japan slid into its first recession
since 2001 as overseas demand faltered and companies cut back
investment. Economic and Fiscal Policy Minister Kaoru Yosano today said
he isn't confident the nation's economy will rebound next fiscal year.
Mitsubishi
Estate lost 8.3 percent to 1,280 yen, the lowest close since August
2005. Market leader Mitsui Fudosan Co. sank 5.9 percent to 1,302 yen.
Condominium developer Hoosiers Corp. plunged 17 percent to 4,850 yen.
The Topix Real Estate Index fell for a sixth day, closing at the lowest
level since January 2004.
Sompo Japan Insurance Inc. retreated 8.9
percent to 700 yen. Tokio Marine Holdings Inc., Japan's biggest listed
insurer, dropped 8.8 percent to 2,845 yen. Moody's Investors Service
today said it may cut its credit rating on unlisted Asahi Mutual Life
Insurance Co. as a drop in shares may erode the insurer's capital.
Moody's, which rates Asahi Baa3, said it may reduce the rating by one
or more levels.
European stocks rose as higher oil prices
lifted energy producers and better-than-expected earnings from
Hewlett-Packard Co. and Home Depot Inc. eased concern the recession
will snuff out profits.
Total SA, Europe's third-largest
energy producer, and BP Plc climbed more than 4 percent as crude
gained. Alcatel-Lucent SA jumped 4.8 percent on Dassault Aviation's
1.56 billion-euro ($2 billion) offer for Alcatel's stake in Thales SA.
National
benchmark indexes increased in nine of the 18 markets in western
Europe. The U.K.'s FTSE 100 rose 1.9 percent, and France's CAC 40
gained 1.1 percent. Germany's DAX added 0.5 percent.
Total climbed
4.6 percent to 40.76 euros. BP, Europe's second-biggest oil producer,
added 4.1 percent to 507.5 pence, and Royal Dutch Shell Plc, the
largest, gained 3.9 percent to 1,693 pence.
Alcatel-Lucent jumped
4.8 percent to 1.90 euros. Dassault Aviation offered 1.56 billion euros
($2 billion) for Alcatel- Lucent's 20.8 percent stake in Thales SA.
BNP
Paribas SA dropped 5.1 percent to 40.81 euros. UBS AG, the Swiss bank
that got a $59.2 billion aid package from the state and central bank,
lost 3.5 percent to 13.27 francs.
The cost of protecting bank
bonds from default rose to the highest in almost a month as prices of
mortgage-linked securities tumble.
Bilfinger Berger AG, Germany's
second-largest construction company, led construction shares lower
after Goldman Sachs Group Inc. added the stock to its ``conviction
sell'' list, citing expectations for lower capital spending in
chemicals and oil industries. The shares lost 4.9 percent to 30.61
euros. Hochtief AG, Germany's biggest construction company, sank 2.8
percent to 27.66 euros.
Stocks rose 1.0% in a volatile
session as traders digested testimony from the heads of the Federal
Reserve, Treasury and FDIC, upside earnings guidance from
Hewlett-Packard and speculation regarding the future of U.S. automakers.
The
S&P 500 climbed to a 1.8% gain at mid-day, and then dropped to a
loss of 2.8% in the final hour of trade before a surge in buying
interest sent the S&P 500 back into positive territory at the
closing bell.
Seven of the ten economic sectors posted a gain.
Fed
Chairman Bernanke, Treasury Secretary Paulson and FDIC Chairman Bair
were called to testify about the $700 billion financial relief package
before the House Financial Services Committee.
Bernanke said there
are some signs that credit markets are improving, although they remain
strained. Treasury Secretary Paulson defended scrapping the original
plan to buy troubled assets, saying that direct capital injections were
more effective given the sharp deterioration in financial markets.
Paulson believes the economy will not recover as fast as anyone would
like, but will recover at a quicker pace because of the relief package.
In
corporate news, Hewlett-Packard (HPQ 33.58, +4.24) announced
preliminary fourth quarter earnings that topped estimates and issued
fiscal year 2009 earnings guidance that was above expectations.
Yahoo!
(YHOO 11.48, +0.85) gained after announcing that co-founder Jerry Yang
will step down as CEO as soon as a replacement is found, raising
speculation that Microsoft (MSFT 19.62, +0.43) could show renewed
takeover interest.
In earnings news, Saks (SKS 3.27, -0.58) tumbled
after missing third quarter earnings expectations, while Home Depot (HD
20.71, +0.71) rose after topping estimates. Both retailers were
cautions about the near-term outlook. Retailers as a whole fell 0.2%.
Shares
of General Motors (GM 3.09, -0.09) and Ford (F 1.68, -0.04) fell to
multi-decade lows. The automakers, along with Chrysler and the United
Auto Workers, are scheduled to testify today before the Senate Banking
Committee regarding possible aid for the struggling U.S. auto industry.
In
economic news, domestic producer prices in October dropped by a
larger-than-expected amount due to the sharp decline in energy prices.
Specifically, October PPI dropped 2.8% month over month, compared to
the expected decline of 1.9%. Core PPI, which excludes food and energy,
rose 0.4%, which was larger than the expected increase of 0.1%.