By Masaki Kondo Dec. 1 (Bloomberg) -- Japan stocks declined on concern bad- loan costs and job losses will mount after the failure of homebuilder Morimoto Co. drove bankruptcies by listed companies to a postwar record. Mitsubishi Estate Co., Japan's No. 2 developer, dropped 4.9 percent. Japan General Estate Co. plunged 12 percent after Mainichi Daily News said the company withdrew job offers to graduates. Oil explorer Inpex Corp. lost 4.9 percent after China's manufacturing contracted the most on record, stoking concern demand for commodities will tumble. ``As the job market is deteriorating and smaller businesses are struggling for financing, consumers will likely tighten their purse strings,'' said Hiroshi Morikawa, a senior strategist at MU Investments Co., which manages about $14 billion. ``The worsening outlook for the global economy will likely continue driving down commodity prices.'' The Nikkei 225 Stock Average slumped 120.89, or 1.4 percent, to 8,391.38 as of 12:35 p.m. in Tokyo, retreating from the gauge's biggest weekly gain in a month. The broader Topix index declined 5.74, or 0.7 percent, to 829.08, with more than two shares dropping for each that rose. Sanyo Electric Co. soared 8.6 percent on a media report Panasonic Corp. may agree on a price for a stake in Sanyo with shareholders. Increasing costs to dispose of nonperforming assets and shrinking demand in the U.S. spurred a 32 percent drop in first- half earnings by Japan's biggest listed companies, according to data compiled by Bloomberg News. Companies ranging from Toyota Motor Corp. to television maker Sharp Corp. plan to cut jobs, while the nation's wages dropped in October for the first time this year, the Labor Ministry said today. `Severe' Situation Morimoto filed for protection from creditors on Nov. 28 with 162 billion yen ($1.7 billion) of debt, nine months after its initial public offering. The bankruptcy, Japan's second- biggest this year, drove corporate failures of listed companies to the highest level since World War II, according to research company Teikoku Databank Ltd. Morimoto was untraded, with the shares offered lower by 14 percent at 370 yen. Twenty-three of the 30 bankruptcies among listed companies this year were in the real estate and construction sectors. Mitsubishi Estate, which jumped by a third in the previous five sessions, dived 4.9 percent to 1,351 yen. Japan General Estate plummeted 12 percent to 121 yen, set for the lowest level on record. The Mainichi said on Nov. 29 the Tokyo-based condominium builder retracted offers to 53 university students last month because of a ``very severe'' financial situation. A gauge of real estate companies had the second-sharpest drop among the Topix's 33 industry groups, after mining companies. China Demand Inpex lost 4.9 percent to 582,000 yen, after rising by a third in the preceding five days. Japan Petroleum Exploration Co. slid 5.2 percent to 3,630 yen. Kanto Natural Gas Development Co. fell 7.1 percent to 632 yen. The Purchasing Managers' Index fell to a seasonally adjusted 38.8 last month from 44.6 in October, the China Federation of Logistics and Purchasing said today. Export orders, output and new orders all shrank the most since the survey began in 2005. ``The slump in big resource users like China and India is increasingly noticeable, despite expectations they would fare relatively well,'' said MU's Morikawa. Crude oil for January delivery sank as much 2.7 percent to $52.96 a barrel in New York after the Organization of Petroleum Exporting Countries deferred a decision to cut output for another two weeks. A $1 price change in a barrel of oil alters Inpex's annual net income by 2.2 billion yen, the company said in May. Sanyo, the world's biggest maker of rechargeable batteries, soared 8.6 percent to 164 yen. Panasonic, seeking a controlling stake in Sanyo, may agree on a price in the ``mid to upper 100'' yen with majority shareholders led by Goldman Sachs Group Inc., Kyodo News reported today. Last month, Goldman broke off its negotiations with Panasonic owing to disagreements over terms. Nikkei futures expiring in December retreated 1.4 percent to 8,400 in Osaka and slumped 1 percent to 8,405 in Singapore. To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

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