Japanese Bank, Retailer Shares Drop on Lower Economic Growth

Source from:  By Makiko Suzuki Dec. 8 (Bloomberg)  12/11/2006

Japan's domestic demand-related shares declined after a government report showed the economy grew at less than half the pace of its initial estimate and lending by Japan's biggest banks dropped last month. Mizuho Financial Group Inc. and Seven & I Holdings Co. fell. Japan Tobacco Inc. advanced for a second day on a newspaper report the world's third-biggest maker of cigarettes has approached U.K.-based Gallaher Group Plc about a takeover. ``Bank shares are what I am avoiding now because of a lack of earnings momentum,'' said Koichi Takatsuka who oversees $1 billion at UAM Japan Inc. in Tokyo. ``JT and Gallaher is a very good combination and if the report is true, JT made the right decision to expand its market.'' Key indexes were little changed. The Nikkei 225 Stock Average fell 9.25, or 0.1 percent, to 16,464.11 at the 11 a.m. lunch break in Tokyo. The broader Topix index lost 0.94, or 0.1 percent, to 1622.21. For the week, the Nikkei has gained 0.9 percent and the Topix has advanced 1.1 percent. Mizuho Financial, the nation's second biggest by assets, fell 4,000 yen, or 0.5 percent, to 829,000. Mitsubishi UFJ Financial Group Inc., Japan's largest bank, slipped 10,000 yen, or 0.7 percent, to 1.46 million. Lending by large-size banks with nationwide networks fell for a second month in November, losing 0.1 percent, the Bank of Japan said in a report. That compared with a 1.2 percent gain in the country's total loans. Meanwhile, the world's second-largest economy expanded at an annual 0.8 percent pace in the three months ended Sept. 30, slower than a preliminary estimate of 2 percent, the Cabinet Office said. The median forecast of 19 economists surveyed by Bloomberg News was for 1.1 percent growth. Japan Tobacco Seven & I, Japan's largest retailer by sales, declined 50 yen, or 1.3 percent, to 3,670. Takashimaya Co., the nation's biggest department store, fell 17 yen, or 1 percent, to 1,716. ``The GDP figure was lowered because of a drop in consumption, as opposed our assumption that capital spending would drag third-quarter growth lower,'' said Hiroshi Chano, who helps look after $7.3 billion at Yasuda Asset Management Co. in Tokyo. Japan Tobacco jumped for a second day, adding 25,000 yen, or 4.7 percent, to 554,000. The stock rose 4.8 percent yesterday. Japan Tobacco contacted Gallaher, owner of Benson & Hedges and Silk Cut brands, the Financial Times said on its Web site yesterday, citing people familiar with the situation. The U.K.- based firm said on Dec. 6 it had received a buyout offer. Japan Tobacco said in a statement it has made no announcement on an acquisition of a British tobacco maker. Sanyo Electric's Recall Sanyo Electric Co. dropped 4 yen, or 2.4 percent, to 160 after Mitsubishi Electric Corp., a Japanese maker of factory robots and cell phones, and NTT DoCoMo Inc., the nation's biggest mobile-phone operator, said they will recall 1.3 million handset batteries made by a unit of Sanyo that may overheat. All Nippon Airways Co., Japan's largest domestic carrier, advanced 7 yen, or 1.7 percent, to 428 after saying it's seeking bids for 13 hotels, including its ANA Hotel Tokyo in the city's entertainment district, said four people familiar with the negotiations. The Tokyo-based airline hired Nomura Holdings Inc. and Jones Lang LaSalle to advise on the sale of the properties, which have a book value of more than 110 billion yen ($954 million) and are located from Hokkaido to Okinawa, said the people, who declined to be named before the deal is completed. December Options Settled Kinden Corp., which designs and constructs optical fiber network and cable television and power distribution lines, jumped 47 yen, or 5.3 percent, to 934, the best performer among the 1,904-member Morgan Stanley Capital International World Index. Credit Suisse Group raised its rating on the stock to ``outperform'' from ``neutral,'' citing expanding orders from power companies. Nikkei futures expiring in March fell 0.2 percent to 16,470 in Osaka and slipped 0.1 percent to 16,470 in Singapore. The settlement price for Japan's Nikkei futures and options contracts for December delivery was set at 16,291.56, traders said. The settlement price, also known as the ``special quotation,'' of Nikkei 225 options is calculated after all stocks in the Nikkei 225 begin trading. Enditem