Japan Stock Rebound Stifled as Carmakers, Shippers Drop

A rebound in Japanese stocks was limited by falling carmakers and shipping lines as price swings continued near a two-year high. The market's plunge yesterday extended its drop to more than 10 percent since last week.

Shipping companies dropped the most among the Topix index's 33 industry groups today, with Mitsui O.S.K Lines Ltd. falling 4.2 percent. Honda Motor Co. sank 1.2 percent as the yen strengthened. Fast Retailing Co. climbed 5.1 percent, clawing back about a half of yesterday's loss. Sony Corp. (6758) increased 2.1 percent after people familiar with the matter said the electronics maker is consulting banks about a proposal to take part of its entertainment unit public.

The Topix added 0.1 percent to close at 1,135.78 in Tokyo after yesterday dropping 3.8 percent. Historical volatility on the gauge was near the highest since the March 2011 disaster. Share rose as much as 2 percent in the morning session as weaker-than-expected U.S. data bolstered the case for continued Federal Reserve stimulus.

"The market is trying to find a place to settle," said Takashi Aoki, a Tokyo-based fund manager at Mizuho Asset Management Co., which oversees about $33 billion. "We don't know where the bottom is yet. Volatility is likely to continue for a while"

The Nikkei 225 Stock Average climbed 1.4 percent to 13,774.54, with the measure's volatility about 60 percent above average. Gains outpaced those on the Topix as Fast Retailing and Fanuc Corp., which together account for about 15 percent of the benchmark, each added more than 4 percent. Volume on the measure was 3.1 percent above the 100-day average.

Abe Rally

The Topix fell 2.5 percent in May, it's first monthly drop since the rally began mid-November. The gauge is still up 32 percent this year, the most among major markets. Shares have risen on optimism Prime Minister Shinzo Abe and Bank of Japan Governor Haruhiko Kuroda will pull the country out of 15 years of deflation.

Mitsui O.S.K, Japan's second-biggest shipper by market value, lost 4.2 percent to 369 yen today. Nippon Yusen KK, the largest, declined 1.9 percent to 266 yen. The Topix Marine Transport measure is down almost 20 percent from its 52-week high, the third-biggest decline among the Topix industry groups.

Carmakers exerted the biggest drag on the Topix today, declining as the yen strengthened to as much as 100.68 per dollar from as weak as 101.28. A gain in the yen hurts overseas earnings when repatriated.

Honda dropped 1.2 percent to 3,830 yen. Toyota Motor Corp., the world's biggest carmaker, lost 0.8 percent to 6,010 yen. Fuji Heavy Industries Ltd., which gets 47 percent of its revenue from North America, dropped 4.2 percent to 2,349 yen.

Sony Advances

Among stocks that gained, Sony advanced 2.1 percent to 2,049 yen. The electronics company is working with Morgan Stanley and Citigroup Inc. as it considers adopting billionaire shareholder Daniel Loeb's proposal for an initial public offering of its entertainment unit, people familiar with the matter said.

Fast Retailing gained 5.1 percent to 34,900 yen after plunging 11 percent yesterday. Fanuc climbed 4.3 percent to 15,240 yen, recovering yesterday's 4.1 percent loss.

Futures on the Standard & Poor's 500 Index were little changed today. The gauge added 0.4 percent yesterday as slower-than-expected economic growth and higher jobless claims fueled speculation the Fed won't rush to curtail stimulus.