By Masaki Kondo Dec. 2 (Bloomberg) -- Japanese stocks tumbled toward the lowest level in almost two weeks as a drop in global manufacturing added to evidence the global recession will deepen. Kobe Steel Ltd., Japan’s fourth-largest maker of the metal, sank 5.6 percent after tripling planned production cuts on dwindling demand from car and ship makers. Honda Motor Co., which gets more than half its profit from North America, slid 6.4 percent after the yen rose against the dollar. Oil explorer Inpex Corp. fell 9.1 percent after crude plunged. U.S. manufacturing shrank last month at the fastest pace since 1982, while production in Europe contracted the most on record. “The global economy is deteriorating at an accelerating rate,” said Mitsushige Akino, who oversees about $468 million at Tokyo-based Ichiyoshi Investment Management Co. “The U.S. manufacturing number convinced people how bad the situation is.” The Nikkei 225 Stock Average slumped 348.84, or 4.2 percent, to 8,048.38 as of 12:37 p.m. on the Tokyo Stock Exchange. The broader Topix index fell 27.20, or 3.3 percent, to 800.27, set for the lowest close since Nov. 20. All but one of 33 industry groups on the Topix declined. Credit losses and writedowns have reached nearly $1 trillion at global financial companies, causing lending to businesses and consumers to dry up. Falling demand pushed manufacturers to cut output worldwide, threatening to a prolong recession that started in the U.S. a year ago, National Bureau of Economic Research, said yesterday. Global Cuts American manufacturing contracted in November at the steepest rate in 26 years, the Institute for Supply Management said yesterday, while European production sank the most since the tally began in 1998, according to Markit Economics. That data followed a report by the China Federation of Logistics and Purchasing that the nation’s production shrank the most on record. Kobe Steel lost 5.6 percent to 153 yen after saying it would deepen output reductions threefold to 600,000 tons in the second half. The world’s No. 3 steelmaker JFE Holdings Inc., which announced its own cuts on Nov. 20, sank 8 percent to 2,135 yen. “Domestic manufacturers are not going to be able to overcome the challenges of the worsening economy,” said Ayako Sera, a strategist at Sumitomo Trust & Banking Co. in Tokyo, which manages $266 billion in assets. Yen, Oil Honda, Japan’s second-biggest automaker, sank 6.4 percent to 1,895 yen, while Panasonic Corp., the biggest maker of consumer electronics, slumped 3.9 percent to 1,104 yen, headed for the lowest level since June 2003. Olympus Corp., an endoscope maker that derives the biggest portion of overseas earnings from Europe, lost 7.7 percent to 1,783 yen. The yen appreciated to as much as 92.89 against the dollar from 95.24 at the close of stock trading in Tokyo yesterday, while rising versus the euro to as much as 117.24 from 120.88. Inpex, the nation’s largest oil and gas explorer, fell 9.1 percent to 532,000 yen. Closest competitor Japan Petroleum Exploration Co. slid 6.1 percent to 3,380 yen, while Mitsubishi Corp., a trading company getting more than half its profit from commodities, lost 7.5 percent to 1,104 yen. Crude oil for January delivery retreated 9.5 percent to $49.28 a barrel in New York yesterday, the lowest settlement since May 2005 and the biggest one-day drop since Oct. 10. A $1 price change in a barrel of oil alters Inpex’s annual net income by 2.2 billion yen ($24 million), the company said in May. Nomura Holdings Inc., Japan’s biggest brokerage, retreated 6.1 percent to 637 yen, set for the lowest close since August 1984. The company yesterday said it will sell 100 billion yen in subordinated convertible bonds to Dai-ichi Mutual Life Insurance Co., joining the nation’s biggest banks in selling securities to replenish capital. Nikkei futures expiring in December retreated 4.2 percent to 8,050 in Osaka and slumped 4.1 percent to 8,045 in Singapore. To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

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