Japan electronics companies battle Europe crisis (Reuters)

TOKYO (Reuters) – Japanese electronics firms are suffering from the downturn in European consumption and the euro's slump to a 10-year low against the yen, senior executives from Sony Corp, Panasonic Corp and Fujitsu Ltd said on Tuesday.

Sony is keen to increase the proportion of parts paid for in euros, to help ease the impact on profits from a gain in the yen against the common European currency, the company's deputy president said at the CEATEC electronics show.

The maker of PlayStation games devices has staved off much of the damage from the dollar's fall against the yen by hedging and procuring parts in dollars, but has been dealt a severe blow by the weakening of the euro amid the debt crisis in Greece, Kazuo Hirai told reporters at Japan's biggest electronics show.

"Shifting all procurement purely for the sake of the euro would upset the balance of procurement, but we will move what we can," he said, adding that such a change would take some time to complete.

The euro hit a 10-year low of 100.77 yen and stayed just above a six-month trough of 85.31 pence hit last month.

Europe is Sony's biggest overseas market, accounting for 23 percent of its revenue and the downturn in consumption there is hurting its sales, as well as those of rivals like Panasonic, in the run-up to the crucial year-end shopping season.

Throughout Japan, manufacturers are considering shifting production abroad as the yen's advance shaves profits. The yen hit a record high against the dollar last month and traded at 76.63 on Thursday, up nearly 11 percent from around 85 yen a year ago.

Nearly two-thirds of manufacturers are suffering from the impact of the strong yen as the currency's rise threatens to derail Japan's economic recovery from the March earthquake, a Reuters poll showed last month.

German retail sales fell at their fastest pace in more than four years in August, data showed last week [ID:nL5E7KU0BD], in fresh evidence of what Hirai called an "extremely challenging" environment.

SONY FACES TOUGH OUTLOOK

Sony is struggling to compete with Samsung Electronics and other lower-cost Asian rivals.

Sony's shares fell 0.7 percent lower on Tuesday after shedding 4.5 percent the previous day to end at their lowest level in 24 years.

The Japanese company has slashed its annual forecast for LCD TVs to 22 million sets from 27 million and has warned annual losses in the division might widen on the previous year.

It has already sold off TV factories in Spain, Slovakia and Mexico in the past few years and outsources more than half of production.

Both Sony and Panasonic are set to report earnings for July-September around the end of October. Samsung is set to provide quarterly earnings guidance this week.

Panasonic President Fumio Ohtsubo sounded a similar note of concern about the effect of Europe's woes.

"It's very tough," he said on Tuesday. "European sales are lower than last year." He said global sales had fallen behind the company's expectations and that he expected a slackening off of growth in emerging markets.

Speaking at the electronics show, Masami Yamamoto, the head of IT company Fujitsu described the impact of the weak euro as "severe."

Fujitsu is coping with currency shifts by building products in the markets where they sell them, he said.

(Reporting by Reiji Murai; Writing by Tim Kelly; Editing by Chris Gallagher and Anshuman Daga)

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Japan Stocks Drop as Europe Impasse Weighs on Banks, Exporters - BusinessWeek

Oct. 4 (Bloomberg) -- Japanese stocks fell, with the Nikkei 225 Stock Average dropping to its lowest level in a week, as discord among European policy makers fueled concern the region will fail to resolve its debt crisis, stalling global growth.

Mitsubishi UFJ Financial Group Inc., Japan's largest lender by market value, fell 3.8 percent, its steepest drop in over six months after financial shares plunged in New York. Mitsubishi Corp., Japan's biggest trading company, dropped 5.7 percent on lower commodity prices. Kawasaki Kisen Kaisha Ltd. tumbled 4.5 percent after the shipping line said it expects a loss because of slumping cargo rates.

The Nikkei 225 fell 1.1 percent to 8,456.12 at the 3 p.m. close of trading in Tokyo, its lowest close since Sept. 26. The measure tumbled 11 percent last quarter, its worst performance since the three months ended June 2010. The Topix lost 1.5 percent to 736.18 today, with about four shares falling for each that gained.

“If we don't get a resolution in Greece, we may see a disorderly default,” said Koichi Kurose, chief economist in Tokyo at Resona Bank Ltd. which oversees the equivalent of $68 billion in assets. “The politicians are all over the place. Stocks are pricing in a scenario where the financial crisis spreads in Europe, the U.S. economy worsens and it leads to a deterioration in the global economy.”

The Standard & Poor's 500 Index fell 2.9 percent yesterday, dropping to a one-year low, led by financial shares amid concern that Europe's debt crisis will spill over into the banking system. Futures on the S&P 500 climbed 0.6 percent today.

Greek Crisis

German Finance Minister Wolfgang Schaeuble yesterday opposed moves to further increase the scale of a euro-area rescue fund until three countries approve a previous upgrade. Slovakia, the Netherlands and Malta have yet to ratify an earlier decision to expand the European Financial Stability Facility to 440 billion euros ($584 billion).

Europe's financial leaders are fighting on multiple fronts, trying to extinguish the Greek crisis while insulating Italy and Spain and shoring up banks that the International Monetary Fund says face as much as 300 billion euros in credit risk.

Japanese lenders dropped. Mitsubishi UFJ Financial dropped 3.8 percent to 331 yen, its steepest decline since March 29. Sumitomo Mitsui Financial Group Inc., the country's second- largest bank by market value, dropped 1.5 percent to 2,114 yen.

Slower Global Growth

“The main thing that's driving down the market is Europe,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “There's this worry that Europe is going to implode and drag down the U.S. with it. It's not good for Asia.”

Goldman Sachs Group Inc. lowered its forecast for world growth to 3.5 percent next year from a previous outlook of 4.3 percent, citing Europe's deterioration. The U.S. also faces a 40 percent chance of a recession, the investment bank said.

More than $10 trillion was wiped from global equity markets last quarter. Benchmark measures for 36 out of 45 nations in the MSCI All-Country World Index posted declines of 20 percent or more from their peaks, meeting the common definition of a bear market, according to data compiled by Bloomberg. Besides the U.S., only two other developed markets -- the U.K. and New Zealand -- haven't dropped 20 percent or more from their most- recent highs.

Mitsubishi Corp.

Trading firms and commodity-related companies declined in Tokyo after oil and copper prices fell. Mitsubishi Corp., which gets about 43 percent of its revenue from commodities, slumped 5.7 percent to 1,429 yen, the biggest decline on the Nikkei 225. Smaller rival Mitsui & Co. lost 2.9 percent to 1,043 yen.

Crude oil tumbled 2 percent in New York yesterday to its lowest level in more than a year amid concern that slower growth will mean less fuel consumption. Copper futures for December delivery fell below $3 a pound to a 14-month low on signs that demand for industrial metals will wane.

Kawasaki Kisen dropped 4.5 percent to 148 yen after saying it expects a net loss of 30 billion yen in the fiscal year ending March 31 because of slumping shipping rates and a drop in the value of shares it owns. Japan's third-largest shipper by sales had forecast a profit of 2 billion yen.

Komatsu Ltd., the world's second-largest maker of construction and mining equipment, slumped 5.1 percent to 1,540 yen. Morgan Stanley MUFG Securities Co. lowered its target price on Komatsu to 2,900 yen from 3,400 yen, citing falling revenue from China.

Automakers, still affected by parts shortages stemming from Japan's March 11 earthquake disaster, declined after reporting falling sales in the U.S. Toyota Motor Corp. dropped 2.5 percent to 2,568 yen. The automaker said sales plunged 17 percent last month in the U.S., its largest market.

Honda Motor Co.'s U.S. sales slipped 8 percent, exceeding a 6.1 percent estimate by five analysts' in a Bloomberg survey. Shares of Honda lost 2.8 percent to 2,202 yen.

--With assistance from Yoshiaki Nohara and Toshiro Hasegawa in Tokyo. Editors: Jason Clenfield, Jim Powell.

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China, Japan Say Europe Must Find Its Own Fix for Debt Crisis - BusinessWeek

September 23, 2011, 12:20 AM EDT By Sho Chandra, Sara Eisen and Aki Ito

(See GMEET for more on the G-20 meeting.)

Sept. 23 (Bloomberg) -- Officials from China and Japan, the world’s second- and third-biggest economies, indicated that their support for Europe will have limits and the region needs to solve its own debt crisis.

Japanese Finance Jun Azumi said in Washington today that while his nation can buy European Financial Stability Facility bonds if needed, there is no blank check.

“At the margin we can do quite a bit to help,” Chinese central bank Deputy Governor Yi Gang said in a panel discussion yesterday at the International Monetary Fund in the same city. At the same time, “the real solution of the European sovereign debt crisis has to be done by Europeans themselves.”

Group of 20 finance chiefs today pledged coordinated efforts to tackle rising risks as Greece teeters on the brink of default and stocks plunge around the world. Weak growth, high unemployment, sovereign stresses and turbulence in financial markets are “renewed challenges facing the global economy,” the officials said.

Azumi said that euro-area nations had “said that this is a euro-area problem, and that the euro-area nations should be the ones to solve the problem.” “We don’t reject that view, we respect it,” he said.

While additional aid is “a possibility” if Europe succeeds in creating a system for dealing with crises, “it’s not like we’re going to provide a blank check,” Azumi told reporters.

Seeking China’s Help

Yi Gang’s remarks came amid investors’ expectations that China may help stabilize the euro region, after Italy this month followed Spain, Portugal and Greece in seeking investment from the world’s fastest-growing major economy. Chinese Premier Wen Jiabao, facing calls to widen support for indebted European countries, signaled this month developed nations should cut deficits and open markets rather than rely on China to bail out the world economy.

Also this month, other Chinese officials indicated the country is prepared to offer assistance. Zhang Xiaoqiang, vice chairman of China’s top economic planning agency, said the nation is willing to buy euro bonds from countries involved in the sovereign debt crisis “within its capacity.”

In the panel discussion yesterday, Yi said his nation’s involvement could be at the country level or with the European Union, and could also extend to cooperation with the IMF.

Odds of a Slump

“We’ve consistently invested in Europe,” Yi said. “We will continue to do so.” A unified and prosperous European economy and a stable euro are “good for the world,” he added.

It is unlikely that the global economy will slide into another slump, in part because “the whole world is still at a very low level” of activity, Yi said. “We have a very moderate recovery” following the financial crisis, which indicates global growth “won’t decrease too much,” he said.

“The probability of that is still rather limited,” Yi said, referring to a double-dip recession. With the right combination of policies, countries can manage the debt crisis and “we can still have moderate growth” in the global economy, he said.

One hurdle is that most nations are constrained in implementing further fiscal and monetary policy measures as they already used them to recover from the last slump, he said.

“Fiscal capacity is very limited,” and “monetary policy is already used pretty much to the limit” in terms of interest rates, quantitative easing and other tools in developed and developing nations, Yi said.

--With assistance from Paul Panckhurst in Beijing. Editors: Nerys Avery, Paul Panckhurst

To contact the reporters on this story: Sho Chandra in Washington at schandra1@bloomberg.net; Sara Eisen in New York at seisen2@bloomberg.net; Aki Ito in Tokyo at aito16@bloomberg.net

To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net

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Japan bank lobby head: more vigilance in trades with Europe banks - Reuters

* Says Japan banks more vigilant in trades with European banks

* Says does not think Japan banks will need to waive Tepco debt

* Says interbank liquidity situation far from 2008 crisis (Rewrites, adds details)

By Taiga Uranaka

TOKYO, Sept 15 (Reuters) - Japanese banks have become increasingly vigilant about trades with European banks, the chairman of the Japanese Bankers Association said on Thursday, as concerns mount about credit risks at the region's financial institutions.

Katsunori Nagayasu, also president of Mitsubishi UFJ Financial Group , added that he did not believe Tokyo Electric Power's (Tepco) creditor banks would have to waive debt to the operator of the crippled Fukushima nuclear plant, since a scheme to compensate victims of the radiation crisis would help it to remain solvent.

Nagayasu said Japanese banks had been very careful even in normal circumstances in dealings with individual European banks as necessary, but had been taking a cautious stance toward European banks overall since July.

"We have become more vigilant in our operations lately," he told a regular news conference of the bankers' association.

Moody's Investors Service cut the credit ratings of two French banks on Wednesday because of their exposure to Greek debt, highlighting growing risks to Europe's financial sector from the deepening euro zone sovereign debt crisis.

Banks would find it increasingly difficult, or costly, to borrow money from peers in the interbank market when there is doubt about their creditworthiness.

Increased nervousness about credit risks in the interbank market has had an impact on Japanese banks' funding activities but the situation is not nearly as dire as the liquidity crunch that followed Lehman Brothers' collapse in 2008.

"It's true that, compared with normal times, we're leaning slightly toward the crisis zone, but it's not really a crisis," Nagayasu said.

The possibility that Tepco's lenders may be asked to waive some of its debt re-emerged this week when Japan's new trade minister, Yukio Edano, said the utility's shareholders and creditors should shoulder their share of the burden for a taxpayer-funded bailout.

"I don't anticipate the need to waive debt for Tepco at all," Nagayasu said.

"Our understanding is that (the bailout scheme) was formulated on the premise of not letting Tepco become insolvent and no need for debt waivers," he said.

Japan's top banks, including Nagayasu's MUFG, Japan's biggest bank by assets, were among lenders that provided about 2 trillion yen ($26 billion) in emergency loans to Tepco in the immediate aftermath of the March 11 earthquake and tsunami, which triggered the world's worst nuclear crisis in a quarter century. ($1 = 76.720 Japanese Yen) (Editing by Edmund Klamann)

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BOJ Miyao warns of Europe woes, risks to Japan recovery (Reuters)

HAKODATE, Japan (Reuters) – Japan's economy may get less support than expected from overseas demand as Europe's debt woes escalate and U.S. growth slows sharply, a Bank of Japan policymaker said, painting a bleak picture for the prospects of recovery from the March earthquake and tsunami.

There are already signs Europe's debt woes are hurting that region's banking sector and economy, BOJ board member Ryuzo Miyao said on Wednesday, warning that fast-growing Asian and emerging markets may begin to feel the pinch as the recovery in advanced economies loses steam.

"European financial and capital markets remain unstable," Miyao said in a speech to business leaders in Hakodate, in the northernmost Japanese prefecture of Hokkaido.

"Risks surrounding Europe's debt problem are heightening."

Miyao, a former academic who is among the most pessimistic board members on the economy, stuck to the BOJ's forecast of a moderate recovery later this year. But he warned of mounting risks such as persistent yen rises and higher energy costs.

"Overseas demand may fall more than initially expected as the recovery in U.S. and European economies slows. That may weigh on Japan's recovery," he said.

On monetary policy, Miyao repeated the BOJ's standard view that it will act appropriately when necessary, signaling the central bank's readiness to ease policy further if Japan's recovery prospects come under threat.

"Miyao toed the BOJ's line on the underlying economy but struck a cautious note on the outlook due to Europe's debt problems, signaling the chance it may cut its projections in its twice-yearly outlook report in October," said Naomi Hasegawa, senior fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities.

"The BOJ may be forced to ease policy further as early as next month if strains in financial markets send the yen surging and share prices tumbling."

The BOJ eased monetary policy last month by topping up its asset buying program on the same day that Tokyo intervened in the currency market to stem sharp rises in the yen.

It kept its monetary settings steady this month but has expressed its readiness to ease further if its forecast of a moderate economic recovery later this year is threatened.

Analysts polled by Reuters expected the BOJ to ease monetary policy again next month by topping up its asset buying scheme again, with the most likely trigger seen as a renewed yen spike that hurts the recovery.

A former academic and an expert on monetary policy, Miyao has voted with the majority since joining the board last year and has mostly toed the central bank's official line on the economy.

(Editing by Edmund Klamann and Chris Gallagher)

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Nikkei ends at 2-1/2 year low on Europe debt worry - Reuters

Sorry, I could not read the content fromt this page.

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High Debt Seen Hurting US, Japan, Europe - Paper - Wall Street Journal

--A paper finds debt starts to weigh on growth when it rises close to an economy's annual output

--That is a predicament currently shared by almost all the world's largest advanced economies

--The paper was presented Friday by three economists at the Bank for International Settlements

(Adds remarks from paper's author about the optimal level of debt in paragraph eight.)

JACKSON HOLE, Wyo. (Dow Jones)--New research suggests the high and rising debt of the U.S., Japan and Europe will stunt economic growth unless countries act quickly to contain it.

A paper presented Friday by three economists at the Bank for ...

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OECD sees cutting Europe, Japan growth forecasts - Reuters

 

Reuters reporter Dan Burns interviews Secretary General for OECD Angel Gurria at the Federal Reserve Bank of Kansas City Economic Policy Symposium in Jackson Hole, Wyoming, August 26, 2011.

Credit: Reuters/Price Chambers

By Dan Burns and Ann Saphir

JACKSON HOLE, Wyoming | Fri Aug 26, 2011 1:55pm EDT

JACKSON HOLE, Wyoming (Reuters) - The OECD is prepared to cut growth expectations for much of the world, including Europe and Japan, the organization's head said on Friday.

"We're not talking about a contraction of the economies, but a slowdown of the growth," Angel Gurria, secretary-general, of the Organization for Economic Co-operation and Development club of industrialized nations, said in an interview with Reuters Insider in Jackson Hole, Wyoming, where central bankers are gathered for an annual meeting.

Only a few countries, like Turkey, are still experiencing strong growth. The rest are linked together in what has become a general slowdown: "In open economies, if they are not growing of course they don't buy from the others," Gurria said.

Federal Reserve Chairman Ben Bernanke on Friday said the U.S. central bank had marked down its outlook for U.S. economic growth and made clear the policy focus was still on spurring a stronger recovery, but he did not provide any fresh details on steps the Fed could take.

Calling the tone of Bernanke's speech "very sober," Gurria said that nevertheless, "It's always good to listen to the head of the Fed saying, 'We're here, we're vigilant, we will do whatever it takes,'"

For the full interview, please see: reut.rs/oEBEio

Despite the near-term gloom, Gurria said there is still room for optimism on the long-term outlook.

"Not only did he say there's a way out, there is of course, but he mentioned many of the reasons," he said of Bernanke's comments. "What we are seeing at the OECD is: Go structural, go social. That is if you ran out of monetary policy room, you ran out of fiscal room because your pockets are empty, so you go structural."

(Reporting by Dan Burns, writing by Ann Saphir; Editing by Padraic Cassidy, Gary Crosse, Leslie Adler)

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Japanese Stocks Fall on Europe Transaction-Tax Plan; Sony, Mizuho Decline - Bloomberg

Japanese stocks fell for the first time in three days as European leaders said they won’t expand a fund to end the region’s debt crisis and U.S. housing starts dropped, reviving concern exporters’ earnings will be curbed.

Toyota Motor Corp. (7203), the world’s largest carmaker, lost 1.5 percent after French President Nicolas Sarkozy and German Chancellor Angela Merkel rejected a plan to expand the rescue fund at a meeting in Paris. Inpex Corp. (1605), Japan’s biggest energy exploration company, declined 3 percent as crude oil fell yesterday. Sumco Corp. (3436), a maker of silicon wafers, tumbled 5.1 percent after Dell Inc. (DELL) cut its revenue forecast following sluggish consumer demand.

The Nikkei 225 Stock Average gave up 0.6 percent to 9,057.26 at the 3 p.m. close in Tokyo. The broader Topix index dropped 0.3 percent to 776.65.

“Europe has been facing financial problems and now we are seeing the economy is slowing,” said Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which oversees about $104 billion.

Futures on the Standard & Poor’s 500 Index slid 0.2 percent today. In New York, the index fell 1 percent to 1,192.76 yesterday as the German and French leaders rejected selling euro bonds and expanding the 440 billion-euro ($633 billion) rescue fund. The leaders also proposed resubmitting a financial- transaction tax that was rejected in 2010.

The Paris meeting “confirmed debt issues cannot be resolved in a short period of time,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc.

Exporters declined after reports showed economic growth in Europe and the U.S. is slowing, hurting the outlook for overseas earnings. Toyota lost 44 yen to 2,855 yen. Sony Corp. (6758), Japan’s biggest exporter of consumer electronics, slid 0.8 percent to 1,687 yen. Honda Motor Co., Japan’s third-largest carmaker, sank 2.5 percent to 2,552 yen.

Gross domestic product in the 17-nation euro area expanded 0.2 percent in the second quarter from the previous three months, when the economy grew 0.8 percent, the European Union’s statistics office in Luxembourg said in a statement yesterday. That’s the weakest growth since the euro region emerged from a recession in late 2009 and was less that the 0.3 percent median estimate of 34 economists in a Bloomberg News survey.

In the U.S., housing starts fell 1.5 percent in July from June, the Commerce Department reported yesterday. Building permits, a proxy for future construction, also dropped.

“The U.S. housing numbers were not strong, and that signals a slowdown in the U.S. economy may persist,” SMBC Nikko Securities’ Nishi said.

Resource companies had the biggest drop among the 33 industry groups in the Topix as oil prices fell yesterday. Inpex lost 16,000 yen to 510,000 yen. Japan Petroleum Exploration Co. (1662), the second-biggest oil driller, slid 1.5 percent to 3,305 yen.

Crude oil for September delivery declined 1.4 percent to settle at $86.65 a barrel in New York yesterday. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum dropped 0.5 percent.

Semiconductor-related stocks fell after Dell, the second- largest personal computer maker in the U.S., missed analysts’ sales estimates and cut its revenue forecast, hurt by sluggish spending on desktop computers and consumer technology.

Second-quarter sales rose less than 1 percent to $15.7 billion, Texas-based Dell said yesterday in a statement. Analysts had estimated revenue of $15.8 billion in the period, which ended July 29, according to Bloomberg data. The company now expects sales growth of between 1 percent and 5 percent this year, down from a previous range of 5 percent to 9 percent.

Sumco plunged 54 yen to 996 yen, the lowest close since December 2008. Elpida Memory Inc. (6665), which makes memory chips, retreated 3.9 percent to 517 yen. Renesas Electronics Corp. (6723), a semiconductor maker, declined 2.7 percent to 534 yen, a level not seen since November 2009.

Sumco declined also after UBS AG cut its stock price estimate to 1,100 yen from 1,600 yen because of weakening earnings on lower sales volume of semiconductor wafers and falling prices of solar cell wafers, according to a report dated yesterday.

Among stocks that rose, general contractors advanced as JPMorgan Chase & Co. raised its rating on the sector’s shares, saying major contractors will receive orders to clear rubble from the March earthquake.

Kajima Corp. (1812), Japan’s biggest general contractor by revenue, increased 3 percent to 238 yen. Taisei Corp. (1801), the third-largest, climbed 4.3 percent to 195 yen. Obayashi Corp. (1802), the No. 4, gained 3.7 percent to 367 yen.

Shipping lines advanced the most in the Topix as The Baltic Dry Index, a measure of shipping costs for commodities, rose for a fifth day yesterday, increasing 2.9 percent.

To contact the reporter on this story: Akiko Ikeda in Tokyo at iakiko@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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