Japanese stocks dropped as demand for goods and services fell and the Royal Bank of Scotland Group Plc forecast the biggest loss in U.K. corporate history, indicating the global economic slump is deepening. Chuo Mitsui Trust Holdings Inc. dived 5.4 percent after KBC Securities recommended selling the stock and on signs the banking crisis will worsen. Inpex Corp., Japan’s largest oil and gas explorer, retreated 5.5 percent after oil prices slid below $35 a barrel. Kawasaki Kisen Kaisha Ltd. fell 5.2 percent after shipping fees for commodities lost for a third day. “The global recession is cooling demand and I would say commodities prices won’t rise in the next 10 years,” said Kiyoshi Ishigane, a Tokyo-based senior strategist at Mitsubishi UFJ Asset Management Co., which oversees about $61 billion. “We’re going to see businesses reporting bigger-than-expected profit drops in the coming months.” The Nikkei lost 238.08, or 2.9 percent, to 8,018.77 as of 1:37 p.m. in Tokyo, set for the lowest close since Dec. 5. The broader Topix index dropped 15.84, or 1.9 percent, to 801.89, with almost five stocks declining for each that rose. U.S. markets were closed yesterday for a holiday and President-elect Barack Obama will be sworn in today. The Nikkei dived by a record 42 percent last year as large manufacturers forecast a 24 percent drop in annual pretax profit for this business year, according to the central bank’s Tankan survey released last month. Household spending on services fell 0.9 percent in November from the previous month, a Trade Ministry report showed today, and companies from Toyota Motor Corp. to Sony Corp. have announced plans to fire workers. Banks Slump The benchmark’s members traded at 0.95 times their net worth as of yesterday, lower than the Standard and Poor’s 500 Index’s 1.68 times and Europe’s Dow Jones Stoxx 600 Index’s 1.21 times. Chuo Mitsui, the nation’s sixth-largest listed bank by assets, tumbled 5.4 percent to 336 yen. KBC cut its rating on the stock to “sell” from “hold” yesterday. Mizuho Financial Group Inc. lost 4.9 percent to 231 yen, and Sumitomo Mitsui Financial Group Inc. retreated 3.8 percent to 3,530 yen. Royal Bank of Scotland yesterday said it may post a loss of as much as 28 billion pounds ($40 billion) this year, which would be the biggest loss in U.K. corporate history, surpassing Vodafone Group Plc’s 22 billion-pound net loss in 2006. Meanwhile, shares of HSBC Holdings Plc, Europe’s largest bank, fell as much as 8.8 percent to a decade-low today, after Knight Vinke Asset Management LLC., the lender’s shareholder, said HSBC may need to sell new shares to shore up its capital. “Given HSBC is seen as one of the healthiest financial institutions, the speculation the bank will need additional capital may signal the reemergence of the global financial crisis,” said Mitsubishi UFJ’s Ishigane. Inpex Falls Inpex dropped 5.5 percent to 670,000 yen, sending a gauge of mining companies to the steepest decline among 33 industry groups on the Topix. Closest domestic rival Japan Petroleum Exploration Co. slipped 4 percent to 4,330 yen. Crude oil for February delivery traded at $34.70, down 5 percent from Friday’s close, in after-hours trading on the New York Mercantile Exchange. Kawasaki Kisen, Japan’s third-largest shipping line, retreated 5.2 percent to 350 yen, and market leader Nippon Yusen K.K. lost 3.2 percent to 481 yen. Mitsui O.S.K. Lines Ltd., the nation’s second biggest, dropped 4.3 percent to 539 yen. The Baltic Dry Index, a measure of shipping costs for commodities, fell 1.5 percent yesterday. Bridgestone Corp., the world’s biggest tiremaker, slumped 4.5 percent to 1,257 yen after rubber prices gained for a second day yesterday. Sumitomo Rubber Industries Ltd. fell 5.3 percent to 658 yen. Yokohama Rubber Co., Japan’s second-biggest tiremaker, sank 3.4 percent to 374 yen. Rubber for June delivery rose 1.2 percent yesterday, bringing a two-day gain to 5 percent. It fell 1.7 percent today. Nikkei futures expiring in March retreated 3.2 percent to 7,990 in Osaka and slumped 3.6 percent to 7,985 in Singapore.

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