Thursday, December 27, 2007

Japan's Nikkei 225 Futures Slump on Slower U.S. Growth Concern

By Patrick Rial

Dec. 28 (Bloomberg) -- Japan's Nikkei 225 Stock Average futures slumped in Chicago after economic data pointed to slower growth in the U.S. and the yen strengthened against the dollar.

U.S.-traded receipts of Sony Corp., the maker of the PlayStation 3 game console, dipped 1.8 percent. Durable goods orders rose less than forecast last month, while jobless claims unexpectedly increased.

Mizuho Financial Group Inc.'s receipts slid after Goldman, Sachs & Co. predicted three U.S. banks will write down an additional $34 billion on securities losses, raising concern the subprime problem will persist.

Asian receipts also fell in the U.S. after Pakistani opposition leader Benazir Bhutto was assassinated, threatening stability on the Indian sub-continent.

``With the weak U.S. economic indicators and the stronger yen, exporters and electronics companies do not look attractive,'' Soichiro Monji, who helps oversee $47 billion at Daiwa SB Investments Ltd. in Tokyo, said in an interview with Bloomberg TV. ``The terrorist attack in Pakistan does not directly affect corporate earnings, but it may have implications for companies doing a lot of business with India.''

Nikkei 225 futures expiring in March closed in Chicago yesterday at 15,465, down from 15,600 earlier in Osaka and 15,605 in Singapore. The Bank of New York Japan ADR Index, which tracks the nation's American depositary receipts, slid 1.6 percent.

Unemployment, Inflation

Yesterday, the Nikkei lost 0.6 percent to 15,564.69 and the Topix index declined 0.6 percent to 1,499.94. Today is the last trading day of the year and the Tokyo Stock Exchange will close after a two-hour morning session. The Nikkei has dropped 9.6 percent in 2007, its first annual loss in five years. The Topix has tumbled 11 percent.

Shares may also be active after the government said core consumer prices climbed 0.4 percent in November, the fastest pace since October 2006, and the unemployment rate dropped to 3.8 percent. Economists had forecast prices would climb 0.3 percent and the jobless rate to remain steady at 4 percent. Consumer prices excluding food and energy fell 0.1 percent.

Investors will also be focused on data on industrial production set to be released 10 minutes before the start of trading in Tokyo.

Receipts of Nissan Motor Co., Japan's third-biggest automaker, dropped 1.1 percent. Canon Inc., the world's largest seller of digital cameras, declined 1. percent.

U.S. orders for items made to last several years rose 0.1 percent in November, compared with a forecast of 2 percent in a Bloomberg survey, Separate figures from the Labor Department showed jobless claims unexpectedly rose last week. That was the first time since August claims increased for two consecutive weeks.

More Writedowns?

Receipts of Mizuho, the country's third-biggest bank by market value, fell 2.2 percent. Those of Sumitomo Mitsui Financial Group Inc., the second biggest, slid 2.4 percent.

Citigroup Inc., JPMorgan Chase & Co. and Merrill Lynch & Co. may write down an additional $34 billion in securities linked to the collapse of the subprime mortgage market, Goldman said in a report. Citigroup may also be forced to cut its dividend by 40 percent to preserve capital, according to the report.

Nippon Steel Corp. may advance after the world's No. 2 maker of the alloy said yesterday it will spend about 25 billion yen ($219 million) to increase automotive sheet production at a venture in China with Baoshan Iron & Steel Co. and ArcelorMittal.

Suzuki Motor Corp., which has a 50 percent market share in the Indian car market, may climb after the Nikkei newspaper said the company will spend about 100 billion yen to double its dealership network there by 2010.

Takashimaya Co., Japan's second-biggest department store operator, may advance. after third-quarter net income rose 34 percent as the company spent less on rent and advertising.

Japan's stock markets will reopen on Jan. 4 after the New Year holiday.

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