- Japanese stocks dropped to the lowest since at least December after Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. disclosed losses on investments related to U.S. subprime loans.
Exporters including Sony Corp. and Toyota Motor Corp. fell after Wal-Mart Stores Inc. cut its profit forecast, sending U.S. shares tumbling on concern consumer demand is cooling.
``It's not clear how long the subprime turmoil will continue so financial shares will be sold until this problem is solved completely,'' said Yasuhiko Hirakawa, who helps manage the equivalent of $80 billion at DLIBJ Asset Management Co. in Tokyo. ``Investors pulled their money out of technology and auto stocks because of signs that U.S. consumption has weakened.''
Exporters also extended their losses after the yen strengthened against the dollar and euro, eroding the value of overseas sales.
The Nikkei 225 Stock Average lost 369.00, or 2.2 percent, to 16,475.61, the lowest since Dec. 8. The broader Topix index dropped 43.31, or 2.6 percent, to 1,594.15, a level not seen since Nov. 29. All 33 industry groups in the index posted losses.
Matsushita Electric Industrial Co. plunged after Nokia Oyj said it will replace mobile-phone batteries made by a Matsushita unit.
The Topix Bank Index dropped 4.5 percent, extending its slide so far this month to 14 percent. Mitsubishi UFJ, Japan's biggest lender by assets, dropped 60,000 yen, or 5.3 percent, to 1.08 million, declining the most since May 23, 2006. Sumitomo Mitsui, the nation's third largest, plunged 58,000 yen, or 5.9 percent, to 920,000, the biggest drop since May 10, 2004.
`It's The Sentiment'
Mitsubishi UFJ said it had unrealized losses of about 5 billion yen ($42.6 million) related to U.S. subprime loans as of the end of July. Sumitomo Mitsui said it recorded ``several billion yen'' of losses in the three months to June 30, after selling about 350 billion yen in U.S. mortgage-backed securities.
``It is not the kind of loss that hurts their earnings significantly,'' said DLIBJ's Hirakawa. ``It's the negative sentiment over the global financial market that's pushing Japanese bank shares lower.''
Orix Corp., the nation's largest non-bank finance company, lost 1,640 yen, or 6.6 percent, to 23,340.
Orix's president, Yasuhiko Fujiki, was quoted by the Nikkei newspaper in an interview as saying the company was affected to an extent ``by swings in the market, but they are within the anticipated range.''
The company has no exposure to U.S. subprime mortgages, Fujiki told the newspaper.
More Redemptions Stopped
Basis Capital Fund Management Ltd., an Australia-based hedge fund, said losses in its Yield Fund may exceed 80 percent. Sentinel Management Group Inc., an Illinois-based cash- management firm that oversees $1.6 billion, froze client withdrawals after saying that credit-market turmoil made it impossible to trade.
Hedge funds run by Bear Stearns Cos., Basis Capital Funds Management Ltd., Absolute Capital Management Holdings Ltd. and BNP Paribas SA have also suspended withdrawals in the last month.
Sony, the world's biggest video-game maker, declined 150 yen, or 2.7 percent, to 5,520. Canon Inc., the world's No. 1 digital camera maker, lost 140 yen, or 2.3 percent, to 6,040. Nintendo Co., which makes Wii game consoles, slid 3,300 yen, or 5.9 percent, to 53,100 in Osaka.
Toyota, poised to become the world's largest carmaker by sales, fell 210 yen, or 3 percent, to 6,850. Honda Motor Co., which made more than half of its sales in North America last year, dropped 110 yen, or 2.7 percent, to 3,920.
Wal-Mart Forecast Cut
Wal-Mart, the world's largest retailer, tumbled 5.1 percent, the most since 2002, after Chief Executive H. Lee Scott said Americans face ``difficult pressure economically.''
The company said its full-year profit will be as much as $3.13 a share, 10 cents lower than the company's initial forecast after sales of apparel and home goods faltered. Wal- Mart also reported second-quarter profit that rose less than analysts anticipated.
In the U.S. the Standard and Poor's 500 Index dropped 1.8 percent to 1,426.54 yesterday, cutting this year's rise to 0.6 percent. The Dow Jones Industrial Average lost 1.6 percent to 13,028.92, the lowest since April. In Europe, the Dow Jones Stoxx 600 Index sank 1.2 percent.
Exporters also fell after the yen recently strengthened to 116.74 against the dollar from 117.88 at the market close in Tokyo yesterday. The Japanese currency rose as high as 157.21 per euro from 160.52.
A stronger yen reduces the value of Japanese export sales when converted back into local currency.
Matsushita, Seiyu Slump
Matsushita, the world's biggest consumer electronics maker, plunged 105 yen, or 5 percent, to 2,015, the largest drop since June 13, 2006. Nokia offered to replace as many as 46 million mobile-phone batteries made by a Matsushita unit as some may overheat, in what would be the largest voluntary consumer electronics recall.
Seiyu Ltd., the Japanese unit of Wal-Mart, slid 13 yen, or 10 percent, to 114, a record low, after forecasting its fifth- straight annual loss as sales growth stalls. The stock was first listed in 1974. It's declined 47 percent in the past 12 months.
The net loss is likely to be 5.9 billion yen in the year ending Dec. 31, the company said yesterday after the market closed. In April, the retailer forecast a return to profit of 800 million yen.
Nikkei futures expiring in September fell 2.6 percent to 16,400 in Osaka and dropped 2.7 percent to 16,405 in Singapore.
About 2 billion shares included in the Topix worth 2.9 trillion yen changed hands. The value of shares traded was in line with the 90-day average.
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