Japanese stocks fell after the yen appreciated to a two-month high and on speculation the spread of swine flu to Tokyo will discourage consumer spending at shops. Honda Motor Co., which gets almost half its sales in North America, retreated 2.8 percent. Aeon Co., Japan’s largest supermarket operator, dived 3.1 percent after the first swine flu cases were found in the Tokyo area. Insurer Tokio Marine Holdings Inc. dropped 4.1 percent after losses on securities holdings caused profit to tumble. Mitsubishi Materials Corp., Japan’s No. 3 copper producer, jumped 3.1 percent on a Nikkei newspaper report the company will boost output. “The negative impact of foreign exchange is bigger than in a normal business climate as no prospects for revenue growth are yet in sight,” said Hideo Arimura, who oversees the equivalent of $2.1 billion at Mizuho Asset Management Co. “Swine flu is weighing on investor sentiment.” The Nikkei 225 Stock Average declined 134.24, or 1.4 percent, to 9,210.40 as of 12:37 p.m. in Tokyo. The broader Topix index fell 10.18, or 1.2 percent, to 876.12, with almost three stocks declining for each that advanced. The Topix was up 3.2 percent on the year through yesterday, outperforming the Standard & Poor’s 500 Index that has edged up less than 0.1 percent. The daily trading value of stocks on the Topix has exceeded 2 trillion yen ($21 billion) only twice this year, and average trading value is 39 percent lower than the three-year mean. Stronger Yen The yen strengthened versus the dollar to as much as 94.29, a level not seen since March 20, from 95.52 at the close of Tokyo stock trading yesterday. A stronger local currency reduces the value of overseas sales for Japanese manufacturers. Honda, Japan’s second-biggest carmaker, retreated 2.8 percent to 2,610 yen. Canon Inc., the world’s No. 1 digital- camera maker, lost 3.3 percent to 3,200 yen. Makers of electronics and cars were the biggest drag on the Topix. Aeon slid 3.1 percent to 856 yen, while Yamada Denki Co., the nation’s largest electronics retailer, slumped 2.7 percent to 5,680 yen. Rakuten Inc., an online shopping operator, leapt 3.4 percent to 52,500 yen on the Jasdaq exchange. Two high school students have been confirmed as the first cases of swine flu in the Tokyo area, local government officials said today. The Health Ministry yesterday said the country had 234 cases in three prefectures, from 4 less than two weeks ago. The virus, officially known as H1N1, has sickened more than 10,000 people in 40 countries. Copper Production “Retail, restaurant and leisure businesses will be affected,” Mitsushige Akino, who oversees about $632 million at Ichiyoshi Investment Management Co. in Tokyo, said about the swine flu spread. “As people are likely to stay in their house, online retailers and mail-order companies will benefit.” Tokio Marine declined 4.1 percent to 2,710 yen. The company yesterday said net income tumbled 79 percent in the year ended March 31 owing to falling values of its securities holdings. The company forecast profit will almost quadruple this business year. Mitsubishi Materials jumped 3.1 percent to 298 yen. The company will resume full production of copper in August as demand from automakers is recovering, the Nikkei newspaper reported today. The metal producer’s three smelting plants have been producing a 10th less than they can since February, the newspaper said. Copper futures for July delivery added 1.8 percent in New York yesterday and extended its gain to 49 percent on the year. Nikkei futures expiring in June retreated 1.3 percent to 9,210 in Osaka and fell 1.3 percent to 9,215 in Singapore.

Source