Japanese Stocks Fall, Led by Property Developers; Takeda Gains

Japanese Stocks Fall, Led by Property Developers; Takeda Gains

By Makiko Suzuki

June 25 (Bloomberg) -- Japanese stocks declined, led by property developers including Mitsubishi Estate Co., as investors shifted funds out of shares that may be hurt by the trend of increasing interest rates.

Some exporters such as Advantest Corp. and Fanuc Ltd. gained as investors judged the benefit of a weaker yen outweighed the risk defaults in the U.S. will curb consumer spending in Japan's largest overseas market.

The Bank for International Settlements said on June 24 central banks may need to continue raising interest rates to slow inflation.

``What people in equity markets have forecast is that interest rates will rise while solid global growth led by emerging markets continues,'' said Masayuki Kubota, who oversees $2.1 billion in assets at Daiwa SB Investments Ltd. in Tokyo. ``Investors shifted money from property developers to major manufacturers selling products globally.''

Takeda Pharmaceutical Co. climbed after a study found the company's Actos drug may lower the risk of heart attack and death.

Victor Co. of Japan Ltd., a unit of Matsushita Electric Industrial Co., rose the most in more than four months after Bloomberg News reported Kenwood Corp. agreed to buy control of the money-losing business, citing people familiar with the issue.

The Topix index fell 13.12, or 0.7 percent, to 1764.87, with a measure tracking property developers posting the biggest percentage loss. The Nikkei 225 Stock Average declined 101.15, or 0.6 percent, to 18,087.48 after gaining as much as 0.1 percent.

The Standard & Poor's 500 Index dropped by the most since early March last week after the near collapse of a Bear Stearns Cos. hedge fund spurred speculation investors will have to write down the value of securities containing subprime mortgages.

Rates to Rise?

The Topix Real Estate Index slid 2.9 percent, the worst performer among the 33 industry groups in the broad measure.

Mitsubishi Estate, Japan's second-biggest property developer by sales, lost 80 yen, or 2.4 percent, to 3,330. Mitsui Fudosan Co., the nation's biggest, fell 100 yen, or 2.8 percent, to 3,430. The Tokyo Stock Exchange's REIT Index, which tracks all Real Estate Investment Trusts listed on the TSE, slid 1.7 percent to 2309.56, the lowest since March 16.

The BIS said in its annual report published yesterday a 37 percent rebound in the cost of oil since mid-January as well as rising wages, increasing capacity utilization and falling unemployment may be stoking inflation.

Central banks have fueled economic growth by keeping borrowing costs at relatively low levels, the BIS said. In the period under review, to May 2007, interest rates ``remained highly accommodative in the industrial countries'' after being raised only ``moderately.'' The BIS is known as the ``central banks' central bank.''

Falling Yen

The Bank of Japan's quarterly Tankan index may show confidence among the nation's largest manufacturers probably stayed close to a two-year high, according to economists surveyed by Bloomberg News. The central bank is scheduled to release the survey on July 2. Stronger-than-expected figures may prompt the BOJ to raise interest rates at a faster pace than anticipated.

Advantest, the world's No. 1 maker of memory-chip testing equipment, gained 60 yen, or 1.1 percent, to 5,550. Fanuc, the world's biggest factory-robot maker, rose 180 yen, or 1.4 percent, to 12,960, reversing a loss of as much as 1.1 percent.

The yen dropped to a record low of 166.86 against the euro last week and slid against the dollar to 123.89, the lowest level since Dec. 6, 2002. The Japanese currency recently traded at 166.73 against the euro and 123.88 per dollar.

Actos Cuts Risk

Japan's large manufacturers forecast the yen will be at around 114 yen to the dollar for the business year ending March 2008, the Tankan for the last quarter showed on April 2.

A weaker yen increases the value of Japanese companies' overseas sales when converted into local currency and make their products more competitive.

Advantest and Fanuc both forecast Japan's currency will trade at 115 yen against the dollar on average this financial year.

Exporters reliant on North American sales fell after reports said Bear Stearns offered $3.2 billion in loans to bail out the High-Grade Structured Credit Strategies Fund, which lost about 20 percent this year because of bad bets on collateralized-debt obligations.

Toyota Motor Corp., the world's biggest automaker by market value, lost 40 yen, or 0.5 percent, to 7,660. Sony Corp., the world's No. 1 video-game maker, fell 90 yen, or 1.4 percent, to 6,460. Toyota made 35 percent of its total sales in North America in 2006 and the U.S. is Sony's largest overseas market.

Victor-Kenwood Merger

Takeda advanced 90 yen, or 1.2 percent, to 7,950. Takeda's Actos drug is in the same family as GlaxoSmithKline Plc's Avandia, which was shown in a study last month to increase patient's chances of having a heart attack by 43 percent. The Actos data suggests the problems with Avandia aren't tied to other medicines in the same family and may lead physicians to favor Actos as they switch patients from Avandia to other drugs.

Victor jumped 12 yen, or 3 percent, to 407, the most since Feb. 21, after surging as much as 9.9 percent. Matsushita, the world's biggest consumer electronics maker, added 20 yen, or 0.8 percent, to 2,475.

Victor, Matsushita and Kenwood are discussing final terms on the sale of Victor after the unprofitable company agreed to a merger with Kenwood, two people familiar with the issue told Bloomberg News, asking not to be identified because the talks are confidential.

Matsushita, which owns more than 52 percent of Victor, has been seeking a buyer of the company for several years. Victor is forecasting a fourth straight loss this year and Kenwood has previously been among candidates to buy the company. With the buyout, Tokyo-based Kenwood will gain the JVC brand for car audio and navigation systems and home-use stereo sets.

Nikkei futures expiring in September fell 0.7 percent to 18,100 in Osaka and Singapore.