By Masaki Kondo Dec. 4 (Bloomberg) -- Japan stocks fell, reversing an early gain, on speculation U.S. carmakers will enter bankruptcy, reducing demand in the world’s biggest economy. Bridgestone Corp., the world’s No. 1 tiremaker, sank 9.2 percent to a five-year low on a report General Motors Corp. and Chrysler LLC are considering a pre-arranged bankruptcy. Mitsui Fudosan Co. led real estate shares lower after Macquarie Securities Ltd. almost halved its target price. Nippon Mining Holdings Inc. surged 11 percent after agreeing to merge with Nippon Oil Corp. “Regardless of whether the U.S. automakers go bankrupt or stay afloat, they’ll have to sack workers,” said Yoshinori Nagano, a senior strategist at Daiwa Asset Management Co., which manages about $96 billion in Tokyo. “Should the companies collapse, it may trigger a series of business failure and worsen an already weakened U.S. economy.” The Nikkei 225 Stock Average declined 79.86, or 1 percent, to close at 7,924.24 in Tokyo, after rising as much as 1.3 percent. The broader Topix index retreated 10.31, or 1.3 percent, to 788.88, with three stocks falling for each that rose. Staff for three members of Congress have asked restructuring experts if a pre-arranged bankruptcy could reorganize the U.S. auto industry without liquidation, a person familiar with the matter said. GM and Chrysler told Congress on Dec. 2 that they need $11 billion in government loans to survive the year. Capital spending fell at the fastest pace in six years last quarter, Japan’s government said today, as companies reduced investment to ride out the nation’s first recession since 2001. Nikkei futures expiring in December fell 1.4 percent to 7,930 in Osaka and slid 1.2 percent to 7,940 in Singapore. To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

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