Japanese stocks slumped, trimming gains on the Nikkei 225 Stock Average’s best week this year, after Toshiba Corp. and Nintendo Co. cut forecasts as Japan slid toward its worst recession in the postwar period. Toshiba and Nintendo lost at least 12 percent after slashing earnings targets on slowing sales. Fanuc Ltd., the world’s No. 1 industrial-robot maker, sank 6.7 percent after manufacturers cut production by a record last month. Shipping lines Nippon Yusen K.K., Mitsui O.S.K. Lines Ltd. and Kawasaki Kisen Kaisha Ltd. tumbled more than 10 percent after slowing commodities demand in China prompted them to reduce earnings targets. “It’s getting scarier and scarier to ponder what will happen around March,” said Hiroshi Morikawa, a senior strategist at Tokyo-based MU Investments Co., which manages about of $14 billion. “Deeper cuts in capital investment and workforce will probably be needed, and a slew of bad news in the coming months will likely batter investor sentiment.” The Nikkei 225 sank 296.14, or 3.6 percent, to 7,955.10 as of 1:57 p.m. in Tokyo, ending a three-day advance. The broader Topix index fell 28.23, or 3.5 percent, to 790.24. The Nikkei headed for a 2.8 percent gain on the week, the most since the period ended Dec. 19. The Nikkei is set to lose 10 percent in January, the steepest monthly drop since October, as waning demand crippled corporate profits and a loss forecast by Royal Bank of Scotland Group Plc reignited financial concerns. The Topix is set for an 8 percent slide. Capital Concern Japanese companies reporting third-quarter results posted a 24 percent tumble in net income for the period, Shinko Research Institute Co. said today in a report. The Nikkei fell by a record in 2008 as the world’s biggest economies slipped into recession, and the International Monetary Fund said this week Japan’s gross domestic product will shrink 2.6 percent this year, which would be the biggest contraction since World War II. Factory output sank by a record 9.6 percent last month from November, the Trade Ministry said today, while separate government reports showed unemployment surged the most in 41 years to 4.4 percent and household spending fell for a 10th month. Toshiba, Japan’s largest chipmaker, sank 19 percent to 313 yen, the sharpest plunge in at least 34 years, after reversing its forecast to a net loss of 280 billion yen ($3.13 billion) in the year to March 31. Goldman Sachs Group Inc. downgraded the stock to “sell,” saying a drop in the company’s net worth may force the company to raise new capital. Wii Sales Nintendo, the world’s biggest maker of handheld game players, tumbled 12 percent to 28,300 yen in Osaka, the sharpest drop since at least May 1990. The company cut its annual net income outlook by a third and slashed its sales target for the Wii game machine for the first time. HSBC Holdings Plc lowered its rating on the stock to “neutral” from “overweight.” Fanuc slid 6.7 percent to 5,460 yen, set for the biggest drop since Jan. 9. Kao Corp., Japan’s biggest maker of household goods, sank 8.7 percent to 2,200 yen, while Shiseido Co., the nation’s top cosmetics maker, retreated 8.4 percent to 1,534 yen. Both companies cut full-year net income forecasts by more than 10 percent yesterday. Nippon Yusen, the nation’s largest shipping line, dived 14 percent to 438 yen, leading peers to the biggest decline among 33 industry groups on the Topix. Closest competitor Mitsui O.S.K. sank 10 percent to 538 yen, and Kawasaki Kisen lost 13 percent to 334 yen. The companies reduced their annual profit projections by as much as 58 percent after the Baltic Dry Index, a measure of commodity-cargo fees, fell to a record low last quarter. Konica Rally Konica Minolta Holdings Inc. soared 11 percent to 710 yen, leading gains on the MSCI World Index. The maker of film used in liquid-crystal displays told analysts it expects cost cuts to boost operating profit next year. Its 12-month stock price estimate was raised 16 percent to 670 yen by Shin Horie, a Tokyo- based analyst at Goldman Sachs. Nikkei futures expiring in March sank 3.1 percent to 7,950 in Osaka and dived 3.2 percent to 7,950 in Singapore.

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