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Japanese Stocks Snap Two-Day Advance as Exports Slow Amid Euro Debt Crisis

12 Jan 2012

Japanese stocks fell, snapping a two-day advance, as weaker exports and a shrinking German economy added to concern the global economy is slowing.

Canon Inc. (7751), a camera maker that gets a third of its revenue in Europe, fell 0.9 percent after a report Japan’s trade surplus narrowed on a stronger yen and weak overseas demand. Brokerages led declines after Nomura Holdings Inc. (8604) said individual investors are buying fewer stocks. Komatsu Ltd. (6301), a construction machinery maker that relies on China for 23 percent of its sales, rose 2.7 percent after slowing mainland inflation raised expectations the government will take action to encourage growth.

The Nikkei 225 Stock Average fell 0.7 percent to 8,385.59 at the 3 p.m. trading close in Tokyo. The broader Topix Index lost 0.9 percent to 727.15 with about four stocks falling for each that rose.

Europe’s economy probably contracted last quarter and will keep shrinking this quarter,” said Takeru Ogihara, chief strategist in Tokyo at Mizuho Trust & Banking Co., a unit of Japan’s third-largest bank by market value. “A strong yen is weighing on Japan’s stocks, especially export-related shares.”

Futures on the Standard & Poor’s 500 Index fell 0.1 percent today. The gauge rose less than 0.1 percent in New Yorkyesterday after climbing 1.1 percent over the previous two days on data showing a rise in hiring.

Germany’s gross domestic product contracted about 0.25 percent in the fourth quarter from the previous three months, the government said yesterday, adding to signs Europe’s largest economy may be on the brink of recession.

Japan Surplus Shrinks

Exporters slid after the Finance Ministry said today that Japan’s current-account surplus narrowed 86 percent from a year earlier to 138.5 billion yen ($1.8 billion). The yen traded at 97.77 against the euro today after reaching 97.28 on Jan. 9, its highest since December 2000. A stronger yen hurts Japanese manufacturers by eroding overseas profits.

Canon lost 0.9 percent to 3,255 yen. Mazda Motor Corp. (7261), an automaker that gets 72 percent of its sales abroad, dropped 2.3 percent to 128 yen.

Securities firms fell after Nomura said total turnover by individual investors on Japan’s biggest exchanges fell 3.4 percent to 7.6 trillion yen in December from the previous month.

Nomura, Japan’s largest brokerage, fell 3.5 percent to 250 yen. Tokai Tokyo Financial Holdings Inc. (8616) slid 3.7 percent to 207 yen, while Okasan Securities Group Inc. (8609) lost 3.2 percent to 241 yen.