Japanese stocks declined, headed for the lowest close in more than a month, as bigger-than-estimated drops in machinery orders and U.S. retail sales fueled concern the global recession is deepening. Advantest Corp., the world’s biggest maker of memory-chip testers, declined 8.6 percent after the nation’s machinery orders in November plunged twice as much as anticipated. Canon Inc., which gets a third of its sales from the Americas, fell 4.8 percent after U.S. retail sales dropped last month and Merrill Lynch & Co. said the company may cut its dividend. Sumitomo Rubber Industries Ltd. led a retreat by tiremakers after Goldman Sachs Group Inc. recommended selling the stock. “With demand dropping like an ebb tide, manufacturers have no choice but to cut investments,” said Hisakazu Amano, head of fund management at Tokyo-based T&D Asset Management Co., which oversees about $39 billion. “U.S. retail sales will remain poor for quite some time; demand there will not recover easily.” The Nikkei 225 Stock Average declined 366.01, or 4.3 percent, to 8,072.44 as of 12:48 p.m. in Tokyo. The broader Topix index fell 19.71, or 2.4 percent, to 799.68, with more than two stocks slumping for each that rose. The gauges were set for the lowest close since Dec. 5. Companies are firing workers and cutting costs as shrinking demand worldwide hurts earnings. Large manufacturers forecast their pretax profits will fall by a quarter this fiscal year, the central bank’s Tankan quarterly survey showed last month. Dividend yields on Nikkei members rose to 2.56 percent, twice the returns on 10-year government bonds, after a record drop in the benchmark last year. Machine Orders Japan’s machinery orders, an indicator of capital spending in the next three to six months, fell by a record 16.2 percent in November from the previous month, the Cabinet Office said today before markets opened. Economists had estimated an 8 percent drop. The report came after the Japan Machine Tool Builders’ Association said yesterday that machine tool orders tumbled 72 percent in December from a year earlier. Advantest fell 8.6 percent to 1,229 yen, while Yokogawa Electric Corp., Japan’s biggest maker of measuring instruments, slid 9.1 percent to 491 yen, posting the third-sharpest drop on the Nikkei. Hitachi Construction Machinery Co., Asia’s second- largest maker of earthmovers, lost 6.3 percent to 1,036 yen. Canon, the world’s biggest digital-camera maker, retreated 4.8 percent to 2,805 yen. Merrill Lynch yesterday cut its rating on the stock to “underperform” from “neutral,” saying the company may reduce its annual dividend by 27 percent to 80 yen. Sony Corp., which gets a quarter of its sales from the U.S., sank 3.1 percent to 2,025 yen. Electronics makers weighed the most on the Topix. ‘Sell’ Tiremakers U.S. retail sales dropped for a sixth month with a 2.7 percent slump in December, the longest stretch of declines since the tallies began in 1992, the Commerce Department said yesterday. Economists had estimated a 1.2 percent fall. Sumitomo Rubber slipped 8.2 percent to 641 yen, and Yokohama Rubber Co. declined 7.9 percent to 375 yen. Bridgestone Corp., the world’s largest tiremaker, fell 5.6 percent to 1,260 yen. Goldman slashed its ratings on the tiremakers to “sell,” citing a “clear decline” in demand. Nikkei futures expiring in March retreated 3.5 percent to 8,080 in Osaka and slumped 3.8 percent to 8,075 in Singapore.

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