Japan Stocks Fall on Korea Conflict, Economy; Advantest Drops

Nov. 24 （Bloomberg） -- Japan’s Nikkei 225 Stock Average fell the most in a month, a day after North Korea attacked South Korea, and as concern grew that Europe’s debt crisis and China’s moves to tame inflation will slow a global economic recovery.

Advantest Corp., which is the world’s biggest maker of memory-chip testers and gets more than 25 percent of its revenue from South Korea, dropped 2.5 percent. Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co., Japan’s three largest carmakers, tumbled at least 1 percent. Mitsubishi Corp., Japan’s No. 1 commodities trader, lost 1.6 percent after oil and metal prices declined. Japanese markets were closed yesterday for a holiday.

“Japan will be adversely affected because it’s right in the center of the conflict,” said Jamie Coutts, sales manager at the brokerage BGC Partners in Singapore. “North Korea has spoken about targeting Japan in the past. Any escalation in tensions over there directly affects Japan, probably more than any country in the region other than South Korea itself.”

The Nikkei 225 Stock Average fell 2 percent to 9,917.11 as of 9:16 a.m. in Tokyo, on course for its biggest decline in a month. The broader Topix index dropped 1.4 percent to 863.33, with about seven stocks retreating for each that rose. All 33 industry groups in the Topix slumped.

North Korea fired artillery shells yesterday at the South Korean island of Yeonpyeong near the disputed border between the two countries, killing two soldiers and setting houses ablaze in the worst attack on its neighbor in at least eight months.

Korean Conflict

South Korea returned fire and scrambled fighter jets as President Lee Myung Bak vowed to respond “sternly.” The clash came 11 days after North Korea showed a uranium-enrichment plant to visiting U.S. scientists.

Futures on the Standard & Poor’s 500 Index gained 0.3 percent today. The index slid 1.4 percent yesterday, its biggest decrease in a week, and more than 15 times as many stocks declined as advanced.

The Nikkei 225 increased 9.9 percent this month through yesterday, the most among 88 national equity benchmarks tracked by Bloomberg. Stocks in the Japanese gauge are valued at 18 times estimated earnings on average, compared with 13.9 times for the S&P 500 and 11.8 times for the Stoxx Europe 600 Index.

Crude oil for January delivery lost 0.6 percent yesterday in New York to settle at $81.25 a barrel, and copper futures dropped 1.1 percent. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum fell 1.6 percent yesterday. Gold futures jumped 1.5 percent, the biggest gain for a most-active contract since Nov. 4.

The yen appreciated to 110.75 against the euro about 1:40 a.m. in Tokyo, its strongest level since Sept. 16. A stronger yen reduces the value of overseas income at Japanese companies when converted into their home currency.