Japanese Stocks Decline as Spain Credit Downgrade Stokes Europe Concern

Japanese stocks fell after Standard & Poor’s cut Spain’s credit rating, fueling concern that a deterioration of Europe’s debt crisis will weigh on Asian economies and corporate earnings.

Nissan Motor Co., a carmaker that gets about 15 percent of its revenue from Europe, dropped 2.5 percent. Canon Inc. slipped 2.7 percent after the camera maker said it’s preparing to move production from two factories affected by flooding in Thailand. Olympus Corp. plunged 15 percent after the optical equipment maker’s board ousted Michael Woodford as president.

“The market has taken positively the idea of recapitalizing Europe’s banks and stocks have rebounded for the past week,” said Kazuyuki Terao, chief investment officer of RCM Japan Co. “Taking concrete action isn’t going to be easy because Germany and France are divided on the issue. Until markets get that, share prices are not going to rise.”

The Nikkei 225 (NKY) Stock Average fell 0.9 percent to 8,748.47 as 12:38 p.m. in Tokyo, trimming its weekly advance to 1.7 percent. The broader Topix dropped 1.1 percent to 750.54, with more than five shares falling for each that advanced.

The Topix tumbled 16 percent this year through yesterday amid concern the U.S. would fall into another recession while Europe’s debt crisis threatens to spread to the banking system. The slide has cut the price of shares on the index to 0.88 times estimated book value, near the lowest since March 2009. (Bloomberg)