BLBG:Japan Stocks Fall as Yen Reaches 10-Year High Against Euro on Debt Concern
Japanese stocks fell for a third day as a surge in lending by the European Central Bank to ease the debt crisis sent the euro to a 10-year low against the yen, clouding the earnings outlook for exporters.
Honda Motor Co. (7267), Japan’s No. 2 carmaker by revenue, fell 1.2 percent. Sharp Corp. fell for a second day after it and other makers of liquid-crystal display panels agreed to settle antitrust claims for $538.6 million. Elpida Memory Inc. (6665) plunged 10 percent after a report the chip maker may seek to delay debt payments.
The Nikkei 225 Stock Average (NKY) fell 0.8 percent to 8,354.87 as of 11:07 a.m. in Tokyo. With two trading days left this year, the Nikkei is headed for an 18 percent annual drop, its biggest decline since 2008. Volume on the gauge was almost 50 percent below the 100-day average, according to data compiled by Bloomberg. The broader Topix lost 0.4 percent to 718.77, with more than twice as many shares declining as advancing.
The surge in ECB lending “has caused the euro to drop against the yen, fueling investors’ concern on the region’s debt issues,” said Kenichi Hirano, general manager and strategist at Tachibana Securities Co. in Tokyo.
Futures on the Standard & Poor’s 500 Index (SPXL1) rose 0.2 percent today. The index lost 1.3 percent yesterday in New York as the ECB’s balance sheet soared to a record 2.73 trillion euros ($3.55 trillion) to encourage purchases of the region’s sovereign debt. Lending to euro-area banks jumped 214 billion euros to 879 billion euros in the week ended Dec. 23, the Frankfurt-based ECB said in a statement today.
Euro Drops
Stock futures rose yesterday as Italy sold 9 billion euros of six-month Treasury bills and borrowing costs fell from the previous auction. A bigger test of the ECB’s lending on demand for European bonds comes today when Italy sells as much as 8.5 billion euros of longer-maturity debt.
Exporters to Europe declined after the euro dropped against the yen to the lowest level since 2001. Honda fell 1.2 percent to 2,316 yen. Ricoh Co., a maker of office equipment and cameras that gets 21 percent of its revenue in Europe, slid 1.4 percent.
The 17-nation currency depreciated to as low as 100.36 yen today in Tokyo, compared with 101.61 at the close of stock trading yesterday. A weaker euro reduces the value of European income at Japanese companies when repatriated.
Elpida plunged 10 percent to 332 yen after the Asahi newspaper reported the company may seek to delay payments to the government, saying the European crisis had hurt earnings. The company in August 2009 received a 30 billion yen ($385 million) loan from the state-owned Development Bank of Japan following a record loss.
Sharp lost 3.9 percent to 661 yen, extending yesterday’s 3.2 percent drop, after it and other display producers including Samsung Electronics Co. agreed to pay $538.6 million to settle antitrust claims by indirect purchasers.
To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Masaaki Iwamoto in Tokyo at miwamoto4@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
