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Nikkei 225, Topix Have Biggest Drops in 2 Months; Banks Decline

Nikkei 225, Topix Have Biggest Drops in 2 Months; Banks Decline

Dec. 8 (Bloomberg) -- Japanese stocks had their biggest drops in two months as some investors said share prices more than reflected the country's economic growth prospects. Banks such as Mizuho Financial Group Inc. led the drop.

``All the good news about economic reports has already been discounted in share prices,'' said Katsunori Hirai, a fund manager at Tokio Marine Asset Management Co. in Tokyo, which has $20 billion in assets. ``The market is at quite a high level.''

Machinery stocks including Fanuc Ltd. dropped after a government report showed smaller-than-expected growth in machinery orders. Brokerages such as Nikko Cordial Corp. and Nomura Holdings Inc. declined on speculation that there was an errant order on the first day of trading for J-Com Co. The Tokyo bourse said it is looking into the trade.

The Nikkei 225 Stock Average dropped 301.30, or 2 percent, to 15,183.36 at the 3 p.m. close in Tokyo. The Topix index sank 29.86, or 1.9 percent, to 1568.73, retreating from its highest since July 2000. Both indexes had their biggest declines since Oct. 6 as all of the Topix's 33 industry groups fell.

Nikkei 225 futures for December delivery sank 1.9 percent to 15,210 in Osaka and dropped 1.9 percent to 15,200 in Singapore.

The Topix and the Nikkei have risen more than 20 percent in the past three months, making them the second and the fifth-best performers among the 80 major global stock indexes tracked by Bloomberg. Evidence of a pickup in capital and consumer spending has raised expectations that economic growth at home will spur profit gains.

The 14-day relative strength measure for the Topix and the Nikkei, a moving average based on whether the index rose or fell, was at 77 and 80 respectively yesterday. A reading above 70 signals to some analysts the index is poised to fall.

To contact the reporter for this story:
Tomoko Yamazaki in Tokyo at [e-mail].


LINK: http://www.bloomberg.com/apps/news?pid=10000101&sid=arp9lLKxlmFc&refer=japan