Japanese stocks fell for a third day on concern shrinking global demand and rising fuel prices will weigh on company earnings. Honda Motor Co., which gets more than half its sales from North America, lost 2.9 percent after billionaire investor Warren Buffett said the U.S. economy “has fallen off a cliff.” Tokyo Electric Power Co. dropped 2.7 percent after crude prices rose, raising the utility’s operating costs. Takeda Pharmaceutical Co. fell 5.1 percent, extending yesterday’s 13 percent drop on concern U.S. approval of its diabetes drug will be delayed. Mitsui Fudosan Co. rose 2.5 percent, leading a rally by real estate companies from a near six-year low. The Nikkei 225 Stock Average retreated 49.20, or 0.7 percent, to 7,036.83 as of 12:50 p.m. in Tokyo, bringing its three-day drop to 5.4 percent. The gauge closed at the lowest since October 1982 yesterday. The broader Topix index fell 8.60, or 1.2 percent, to 701.93. “The global economy is in a much worse state than initially thought, and companies can’t seem to shed inventory at the rate people had hoped,” said Naoki Fujiwara, chief fund manager at Tokyo-based Shinkin Asset Management Co., which oversees about $6.1 billion. Developers and financial companies “have been oversold, even though the nation’s banking system is relatively unscathed.” Nikkei members traded at 0.81 times average net worth as of yesterday, the lowest level on record dating back to July 1989, according to index compiler Nikkei Inc. The measure has fallen by a fifth this year as the World Bank predicts the global economy will contract for the first time since World War II. Automakers, Generators Buffett, whose Berkshire Hathaway Inc. posted its worst results ever in 2008, yesterday said the U.S. economy “can’t turn around on a dime,” and efforts to stimulate recovery may lead to inflation higher than in the 1970s. Americans are fearful and changing their buying habits, he said during an appearance on the CNBC television network. Honda, Japan’s second-largest automaker, sank 2.9 percent to 2,045 yen, and market leader Toyota Motor Corp. lost 2.1 percent to 2,830 yen. Sony Corp., which gets a quarter of its sales from the U.S., fell 1.8 percent to 1,732 yen, and camera maker Canon Inc. declined 1.6 percent to 2,125 yen, extending its slump to a seventh session. Tokyo Electric, Asia’s biggest utility, slipped 2.7 percent to 2,540 yen, and Kansai Electric Power Co. slid 3.2 percent to 2,155 yen. Chubu Electric Power Co. lost 4 percent to 2,185 yen. Power generators as a group were the biggest contributors to the Topix’s slump. Oil Gain Crude oil for April delivery jumped 3.4 percent to $47.07 a barrel in New York yesterday, the highest settlement since Jan. 6. A $1 change in a barrel of crude alters Tokyo Electric’s annual fuel costs by 17 billion yen ($172 million), the company said in January. The oil contract added 0.2 percent today. Takeda, Japan’s largest drugmaker, sank 5.1 percent to 3,150 yen, the lowest since March 1998. It was the most actively traded stock in Tokyo. The U.S. Food and Drug Administration said clinical data on Takeda’s diabetes drug alogliptin were insufficient, Takeda announced on March 6. Takeda’s shares have been downgraded by at least six brokerages since then. Mitsui Fudosan gained 2.5 percent to 907 yen. Mitsubishi Estate Co., Japan’s No. 2 developer, added 1.9 percent to 908 yen. Sumitomo Realty & Development Co., the No. 3, added 2.4 percent to 823 yen. The 52-member Topix Real Estate Index, which yesterday fell to the lowest level since June 2003, was the No. 2 gainer today among groups on the broader gauge. There have been 11 bankruptcies among Japan’s listed companies this year, with six of those in the property industry, as the recession prompted banks to rein in lending. Market Support? Japanese Finance Minister Kaoru Yosano today said the government had a “strong will” to deal with the credit squeeze. The ruling Liberal Democratic Party is considering plans to shore up the nation’s stock market, he told reporters in Tokyo. “Large developers are highly unlikely to collapse, and the failures of smaller players won’t have that big an impact on the whole property sector,” said Shinkin Asset’s Fujiwara. “The government needs to present effective economic plans promptly, rather than supporting the market.” Nikkei futures expiring in March dipped 0.1 percent to 7,040 in Osaka and retreated 0.3 percent to 7,035 in Singapore.

Source