Feb. 4 (Bloomberg) -- Japanese stocks fell, dragging the Nikkei 225 Stock Average to its biggest drop in almost two months, on concern the U.S. government won't seek to stem declines in the dollar against the yen. Toyota Motor Corp. and Fuji Photo Film Co. led declines by exporters. The Nikkei 225 Stock Average slid 1.8 percent to 10,447.25 at the 3 p.m. close in Tokyo. The Topix index slipped 2 percent to 1022.61. U.S. Treasury Secretary John Snow yesterday called for ``more flexibility'' in currency markets, suggesting finance ministers at a Group of Seven meeting this weekend may not agree on halting the dollar's slide.
``It's clear that the U.S. will favor a weaker currency and that's making the market jittery and prompting some selling of exporters,'' said Norihito Kanai, who helps manage $2.5 billion at Meiji Dresdner Asset Management Co. in Tokyo. ``It will have a negative impact on their earnings and share prices.'' The Morgan Stanley Capital International's Asia-Pacific excluding Japan Index shed 0.4 percent to 227.45. Benchmarks fell in all markets in the region except for those of Australia, Philippines, Thailand and China. The MSCI Asia Pacific Index, of which Japanese stocks represent 60 percent, fell 1.3 percent to 87.83, a sixth straight loss and the longest losing streak since March last year.
Bank Inspections
Toyota, which derives about 80 percent of operating profit from North America, dropped 4 percent to 3,400 yen. The world's biggest carmaker by market value is scheduled to report fiscal third-quarter earnings tomorrow. Pioneer, whose overseas sales account for 65 percent of its total revenue, slid 5 percent to 3,030 yen. UFJ Holdings Inc. led declines by Japanese banks amid concern recent inspections by financial regulators will uncover more bad loans at the nation's lenders.
Last week, the Financial Services Agency said it would start a third round of ``special inspections'' at the major banks, focusing on the health of their largest borrowers. The two previous special inspections forced lenders to downgrade some of their borrowers and to set aside more provisions for bad loans, resulting in full-year losses. UFJ Holdings, the nation's fourth-biggest lender, dropped 6.9 percent to 406,000 yen. Mizuho Financial Group Inc., Japan's No. 1 lender, slid 4.3 percent to 287,000 yen.
Kookmin Bank
In South Korea, the Kospi index shed 0.5 percent to 835.50. Kookmin Bank dropped 4 percent to 44,000 won. J.P. Morgan Chase & Co. cut its 2004 net profit forecast for Kookmin by 18 percent to 1.4 trillion won ($1.2 billion), citing concern about lower loan growth and net interest margins. Dongwon Securities Co. also lowered its earnings forecast for this year by 16 percent to 1.1 trillion won because of rising overdue loans. In Taiwan, Advanced Semiconductor Engineering Inc., the world's second-largest chip packager, jumped 3.4 percent to NT$39.30. The Taiwanese company agreed to buy NEC Electronics Corp.'s assembly and testing operations for about $40 million, a person involved in the transaction said earlier. The purchase will spur sales at Advanced Semiconductor by at least $100 million this year, the person said, asking not to be identified. NEC Electronics, the world's sixth-largest chipmaker, sank 6 percent to 6,840 yen.
Thailand
Thailand's SET Index rose 1.6 percent to 710.87, extending its two-day gain to 6.5 percent, the biggest since January 2001. The World Health Organization said bird flu hasn't triggered a human epidemic of the type that may kill more people than the 774 who died of SARS. The Thai government yesterday promised to eradicate the virus by the end of this month. The virus has killed 13 people in Asia. PTT Pcl, the country's largest energy company, added 1.3 percent to 158 baht. Land & Houses Pcl, the nation's largest homebuilder, jumped 7.9 percent to 12.3 baht. ``For long-term investors, this is a great buying opportunity,'' said Philip Gawsawadikul, head of research at Asset Plus Securities Pcl. //www.bloomberg.com