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Japanese Stocks Reverse Advance on Chinese Trade Data, Strengthening Yen

13 Mar 2012

Japanese stocks erased earlier gains, ending a two-day rally, after China posted its largest trade deficit in more than two decades and the yen rebounded from a 10-month low against the dollar, damping the earnings outlook for exporters.

Komatsu Ltd. (6301), a construction machinery maker whose biggest market is China, dropped 1.8 percent. Nippon Paper Group Inc. (3893) paced losses among paper companies after a report that wholesale prices of some high-quality paper declined. Energy explorer Inpex Corp. (1662) led mining companies higher after oil and metals prices gained on March 9.

 March 12 (Bloomberg) -- Kathy Matsui, chief Japan equity strategist and co-head of Asia investment research at Goldman Sachs Group Inc. in Tokyo, talks about the impact of the March 11 disaster on Japan's stock market and investor sentiment. Matsui speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
The Nikkei 225 Stock Average (NKY) fell 0.4 percent to 9,889.86 at the 3 p.m. close in Tokyo after earlier rising above 10,000. The broader Topix (TPX) Index lost 0.4 percent to 845.28 after adding 1.3 percent last week. Stocks gained earlier after U.S. jobs data beat estimates last week.

“The Nikkei may lack momentum to extend gains beyond 10,000,” said Takeru Ogihara, chief strategist in Tokyo at Mizuho Trust & Banking Co., a unit of Japan’s third-largest lender by market value. “Europe’s economy is contracting and China’s economic fundamentals remain dicey with exports being so weak.”

U.S. Jobs Data

Futures on the Standard & Poor’s 500 Index (SPXL1) fell 0.4 percent today. The gauge rose 0.4 percent in New York on March 9 after a 227,000 increase in payrolls last month topped the median projection of economists in a Bloomberg News survey.

China posted its largest trade deficit since at least 1989 last month as Europe’s sovereign-debt turmoil damped exports and imports rebounded after the weeklong Lunar New Year holiday, the government reported on March 10.

Komatsu slid 1.8 percent to 2,320 yen, and Hitachi Construction Machinery Co (6305), a Japanese machinery maker that generates 27 percent of its sales in China, advanced 0.2 percent to 1,781 yen after rising as much as 2.5 percent earlier. A Japanese government report today showed machinery orders gained 3.4 percent in January after falling 7.1 percent in December.

The yen rose against all of its major counterparts today, strengthening to as much as 82.11 against the dollar, after touching 82.65 on March 9, the lowest since April 27. A stronger yen cuts overseas earnings at Japanese companies.

Exporters Fall

Canon Inc. (7751), a camera maker that gets 80 percent of its revenue overseas, lost 1.5 percent to 3,705 yen. Nintendo Co. (7974), the world’s biggest maker of video-game consoles, fell 1.2 percent to 11,540 yen.

Paper companies dropped the most among the Topix’s 33 industry groups after the Nikkei newspaper reported the wholesale price of high-quality light coated paper fell for the first time in a year and half. Nippon Paper lost 4.7 percent to 1,812 yen, and Daio Paper Corp. (3880) dropped 1.4 percent to 548 yen.

The Topix (TPX) has gained 10 percent since March 15 last year, when the measure plunged four days after the record earthquake and tsunami struck Japan’s northeast and caused a nuclear disaster. The gain, buoyed by global monetary easing and reconstruction demand, boosted the value of shares on the index to 1.23 times book value, compared with 1.12 in March 2011.