Japanese Stocks Fall on Citigroup, Merrill Subprime Concern

Japan's Topix index fell by the most in six weeks. Mitsubishi UFJ Financial Group Inc. led the decline on speculation Citigroup Inc. may be short of capital, renewing concern losses from U.S. subprime mortgages will reduce profits.

A measure of banks was the worst-performing group among the 33 industries in the index. Stocks extended their drop in the afternoon after the Wall Street Journal reported Merrill Lynch & Co. may have attempted to delay recognizing losses on mortgage- backed securities.

Honda Motor Co. led exporters lower after U.S. consumer spending rose less than forecast and manufacturing slowed more than estimated. In the U.S. the Standard & Poor's 500 Index slumped 2.6 percent yesterday, erasing about $369 billion of market value. Citigroup led declines by financial companies, plunging the most in five years.

``It's not just Citigroup, but a new sense that this subprime investment problem is going to linger with financial companies for a while,'' said Yoshinori Nagano, who helps oversee about $70 billion at Daiwa Asset Management Co. in Tokyo. ``There were expectations the U.S. would improve, but now those predictions are being pushed further into the future.''

The Nikkei 225 Stock Average slumped 352.92, or 2.1 percent, to 16,517.48 at the close in Tokyo. The broader Topix index dropped 35.61, or 2.2 percent, to 1,600.17, its biggest slide since Sept. 18. For the week, the Nikkei gained 0.1 percent, while the Topix jumped 1.7 percent.

Nikkei futures expiring in December lost 2.5 percent to 16,490 in Osaka and fell 2.3 percent to 16,520 in Singapore.

penny-stock-usa.com