Japanese Stocks Retreat After Commodities Plunge on Global Growth Concerns

Japanese stocks fell for a second day after oil and metal prices plunged on concern Chinese measures to slow inflation and Ireland’s debt crisis will drag down global growth.

Mitsubishi Corp., Japan’s largest commodities trader, dropped 1.6 percent. Mitsubishi Materials Corp., a non-ferrous metal producer, tumbled 3.3 percent. Komatsu Ltd., a maker of construction equipment which gets about 20 percent of its revenue in China, lost 1.6 percent. Nippon Yusen K.K., the Japan’s biggest shipping line by sales, lost 1.1 percent after cargo tariffs dropped.

The Nikkei 225 Stock Average fell 0.7 percent to 9,729.29 as of 9:27 a.m. in Tokyo. The broader Topix index declined 0.6 percent to 842.53, with more than three stocks retreating for each that rose. All but two of the 33 industry groups in the Topix dropped.

“Pressure to sell stocks, mainly commodity-related shares, will increase,” said Hiroichi Nishi, an equities manager in Tokyo at Nikko Cordial Securities Inc. “There are worries demand will decrease on China’s tightening policies.”

Futures on the Standard & Poor’s 500 Index gained 0.3 percent today. The index dropped 1.6 percent yesterday in New York, the most since Aug. 19.

Mitsubishi sank 1.6 percent to 2,069 yen. Mitsui & Co., which counts commodities as its biggest source of profit, slumped 1.9 percent to 1,290 yen. Mitsubishi Materials tumbled 3.3 percent, the most in the Nikkei 225. Dowa Holdings Co., which mines, refines and smelts various metal-related products, retreated 2.6 percent to 492 yen.

Commodities Decline

The London Metal Exchange Index of prices for six industrial metals including copper and aluminum plunged 6.3 percent yesterday, the biggest drop since May 4. Copper futures for March delivery tumbled 4.9 percent yesterday. Crude oil for December delivery dropped 3 percent yesterday in New York to $82.34 a barrel, the lowest settlement since Oct. 29.

Companies that rely on revenue in China also declined. Komatsu dropped 1.6 percent to 2,201 yen. Hitachi Construction Machinery Co., the world’s biggest maker of giant excavators, fell 1 percent to 1,856 yen.

Chinese Premier Wen Jiabao said on state television yesterday night the cabinet is drafting measures to counter overly rapid price gains, suggesting intensified government efforts to combat the fastest inflation in two years.

Shipping Lines Retreat

Nippon Yusen lost 1.1 percent to 350 yen. Mitsui O.S.K. Lines Ltd., the second-largest shipping line by sales, fell 1.1 percent to 549 yen. Kawasaki Kisen Kaisha Ltd., the No. 3, retreated 1.8 percent to 331 yen.

The Baltic Dry Index, a measure of shipping costs for commodities, retreated for 14 consecutive days through yesterday.

Ireland is in talks with European and International Monetary Fund officials about a bailout that would enable the country to inject capital into the nation’s banks, said a European official with direct knowledge of the talks. The two- part funding package would mean Ireland wouldn’t have to tap the bond market for an extended period as it tries to cut the budget deficit, said the person, who spoke on condition of anonymity.

The Topix declined 6.6 percent this year through yesterday, compared with gains of 5.7 percent by the S&P 500 and 4.8 percent by the Stoxx Europe 600 Index. Stocks in the Japanese benchmark are valued at 15 times estimated earnings, compared with 13.9 times for the S&P 500 and 12 times for the Stoxx 600.

The yen depreciated to 83.59 against the dollar about 3 a.m. in Tokyo today, the weakest level since Oct. 5. That boosts the value of overseas income at Japanese companies when converted into their home currency.

“There are hopes that companies will raise their profit forecasts, since the yen is weaker than the level major exporters expect for the second-half period,” said Nikko Cordial’s Nishi. Japan’s fiscal year runs from April to March.