Japanese stocks fell for a second day after the dollar weakened against the yen while the Tokyo market was closed yesterday, damping the outlook for export earnings. Honda Motor Co., Japan’s second-largest carmaker, lost 1.1 percent. Kyocera Corp., an electronic-equipment maker that earns a third of its revenue from the U.S. and Europe, slid 1.1 percent. Mitsubishi UFJ Financial Group Inc., a bank whose share price has advanced almost 15 percent in the past two months, retreated 0.7 percent. Mitsui O.S.K. Lines Ltd., the operator of the world’s biggest merchant fleet, declined 2.5 percent after Goldman Sachs Group Inc. cut its rating to “sell” and cargo rates dropped to a five-month low. “The stronger yen will likely lead investors to sell shares to lock in profits,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc. The Nikkei 225 Stock Average fell 0.7 percent to 10,279.19 as of the 3 p.m. close in Tokyo. The broader Topix lost 0.5 percent to 901.66, with more than three times as many shares declining as advancing. Both gauges had the biggest drop since Dec. 20 and sank to the lowest levels since then. For the week, both the Nikkei 225 and the Topix lost 0.2 percent. The Nikkei 225 dropped for the first time in eight weeks, and the broader gauge slid for the first time in four. The Topix has retreated about 9.7 percent from its high this year on April 15 as Europe’s debt crisis, China’s steps to curb property prices and concern about U.S. economic growth damped confidence in a global recovery. Shares in the broader index are valued at 15.7 times estimated earnings on average, near a four-month high. Exporters Decline Carmakers contributed the most to the Topix’s decline among its 33 industry groups, followed by banks and electronics makers. Honda Motor Co., an automaker that gets about 80 percent of their sales abroad, slid 1.1 percent to 3,265 yen. Toyota, the world’s biggest carmaker, fell 0.5 percent to 3,225 yen. Mazda Motor Corp., Japan’s second-largest car exporter, sank 2.5 percent to 239 yen. Kyocera lost 1.1 percent to 8,420 yen. Murata Manufacturing Co., a maker of precision electronics that gets more than 80 percent of its revenue outside of Japan, fell 1.8 percent to 5,560 yen. Weaker Dollar The dollar depreciated to as low as 82.86 against the yen yesterday in New York, the weakest level since Dec. 14. The euro weakened to as low as 108.46 against the Japanese currency yesterday, near the lowest level this month. That reduces the value of overseas income at Japanese companies when converted into their home currency. Japanese stock markets were closed yesterday for a public holiday. Mitsubishi UFJ Financial, Japan’s biggest publicly traded bank, slipped 0.7 percent to 440 yen. Sumitomo Mitsui Financial Group Inc., which is Japan’s second-largest lender and jumped almost 20 percent in the past two months, slipped 0.8 percent to 2,888 yen. Sumitomo Mitsui was the most-active stock by value in Japan. Bank stocks as a group rose 15 percent in the past two months, beating the Topix’s 9.8 percent gain in the same period. “The stock market has been rising lately and it may be about time for investors to take a rest,” said Hisakazu Amano, who helps oversee about $29 billion at Tokyo-based T&D Asset Management Co. “Investors in buy positions may be clearing their positions as it’s the end of this year.” Light Trading About 1.46 billion shares were traded on the Tokyo exchange today, the lowest level since Aug. 23, according to data compiled by Bloomberg. Markets in Australia, Hong Kong and Singapore shut early for Christmas Eve. “Investors are in a wait-and-see mood,” said Naoteru Teraoka, general manager at Tokyo-based Chuo Mitsui Asset Management Co., which oversees about $26 billion. “There isn’t any sole Japanese news big enough to boost stocks amid many foreign investors taking vacation.” Mitsui O.S.K. tumbled 2.5 percent to 554 yen after its investment rating was cut to “sell” from “buy” by Goldman Sachs. Nippon Yusen K.K., Japan’s largest shipping line by sales, fell 1.4 percent to 364 yen and Kawasaki Kisen Kaisha Ltd., the third-biggest, slid 1.4 percent to 353 yen after Goldman cut their target prices and maintained its “neutral” rating on both stocks. Shipping companies had the steepest percentage decline among the Topix’s industry group. The Baltic Dry Index of shipping costs for commodities declined 1.9 percent yesterday, a 13th consecutive retreat to the lowest level since July 21. Copper futures for March delivery dropped 0.4 perceQnt yesterday in New York. The London Metal Exchange Index of six metals including copper and aluminum, slipped 0.8 percent yesterday, falling for a second straight day. To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net. To contact the editor responsible for this story: Nicolas Johnson at nicojohnson@bloomberg.net.

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