Japan's Topix Drops to a 2-Year Low; Exporters, Banks Lead Fall

Japanese stocks dropped, driving the Topix index to the lowest in more than two years, after reports of subprime losses at U.S. banks sent the dollar tumbling, clouding the profit outlook for companies including Canon Inc.

Canon, which generated almost 75 percent of its sales overseas last year, slid to the lowest in three months. Mizuho Financial Group Inc. tumbled to the lowest since August 2005 on concern more announcements of subprime losses may be forthcoming.

In the U.S., the Standard & Poor's 500 Index slumped 1.4 percent on Nov. 9 after Wachovia Corp. announced losses on subprime-related investments, while Bank of America Corp. and JPMorgan Chase & Co. also said their earnings may suffer.\

``Investors have to reevaluate what shares are worth as the U.S. starts pulling down economies globally,'' said Takashi Kamiya, who helps oversee $16 billion at T&D Asset Management Co. in Tokyo. ``The continued weakness of the dollar is going to cause substantial damage to exporters' earnings.''

The Nikkei 225 Stock Average lost 386.33, or 2.5 percent, to 15,197.09 at the close of trading in Tokyo, a level not seen since July 2006. The broader Topix declined 37.95, or 2.5 percent, to 1,456.40, the lowest since Oct. 31, 2005. All 33 industry groups included in the gauge fell.

Shares extended declines in the afternoon after an order by China's government to increase bank reserves sent stocks there tumbling.

Subprime Losses

Canon slid 150 yen, or 2.7 percent, to 5,430. Honda Motor Co., which expects the yen to average 113 per dollar this year, declined 140 yen, or 3.6 percent, to 3,760. Toyota Motor Corp., the world's largest automaker by value, fell 170 yen, or 2.8 percent, to 5,980.

Wachovia, the fourth-biggest U.S. bank, said on Nov. 9 it may have lost as much as $1.7 billion this quarter on mortgage- related investments. Bank of America and JPMorgan, the No. 2 and No. 3 lenders, reported that their fourth-quarter results may be hurt by tightening credit markets.

HSBC Holdings Plc is set to announce $1 billion of bad debts from its subprime mortgage business, the Daily Telegraph reported yesterday. Morgan Stanley cut its rating on the shares because of concern about potential losses.

Also in the U.S., Qualcomm Inc., the world's second-biggest maker of mobile-phone chips, trimmed its profit forecast and Bear Stearns & Co. cut its earnings estimates for retailers including Target Corp. due to the slowing economy.
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