Japanese Stocks Fall as Commodities Companies, Banks Decline

Oct. 27 (Bloomberg) -- Japanese stocks fell, headed for their biggest drop in three weeks, after a decline in the price of crude weighed on commodities companies and banks slumped on concern they will be slow to recover from the recession.

Mitsubishi Corp. and Mitsui & Co., Japan’s largest commodities traders, sank more than 3.5 percent after crude dropped the most in a month in New York yesterday. Sumitomo Mitsui Financial Group Inc., Japan’s second-biggest bank by market value, lost 1.3 percent, mirroring declines by U.S. financial shares after Rochdale Securities LLC analyst Richard Bove said Bank of America Corp. may have to sell shares to pay back its government bailout.

“Financial stocks will be the focus of selling,” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co. “Energy-related stocks should fall on lower commodity prices as well.”

The Nikkei 225 Stock Average lost 1.2 percent to 10,234.10 as of 10:10 a.m. in Tokyo. The broader Topix index decreased 1.7 percent to 895.44, with more than eight times as many shares retreating as advancing. Both gauges were on course for their steepest slump since Oct. 2.

In New York yesterday, the Standard & Poor’s 500 Index retreated 1.2 percent. Financial companies led the decline after Bove said the government will force Bank of America to raise more capital before repaying the Troubled Asset Relief Program. Crude oil for December delivery lost 2.3 percent to $78.68 a barrel, the biggest drop since Sept. 24.

Sumitomo Mitsui dropped 1.3 percent to 3,100 yen. Tokio Marine Holdings Inc., Japan’s largest casualty insurer, lost 3.2 percent to 2,305 yen. A measure of insurance companies in the Topix had the largest decline among 33 industry groups.

Hitachi Ltd., a maker of nuclear reactors, jumped 4 percent to 311 yen, on course for its biggest increase since Oct. 7. The company narrowed its full-year net loss forecast because of a recovery in demand in China and other emerging markets.