Japanese Stocks Drop on Concern Subprime Losses to Continue

Japanese stocks fell, sending the Nikkei 225 Stock Average to its lowest in seven weeks. Banks such as Mitsubishi UFJ Financial Group Inc. led declines on concern investments related to subprime U.S. mortgages will curb profits.

Mitsubishi UFJ dropped to its lowest since Oct. 17. Deutsche Bank AG said on Nov. 2 Merrill Lynch & Co. may have to write down another $10 billion subprime-linked assets. Citigroup Inc. said it may have to write down as much as $11 billion for losses on such investments.

Stocks also retreated after Ichiro Ozawa, the leader of the opposition Democratic Party of Japan, said he submitted his resignation, increasing the chances of a continued stalemate in Japan's legislature.

``It's become impossible to measure how big the losses will be at these financial institutions, and we could see them drag the economy down,'' said Hiroshi Chano, who helps manage $7.3 billion at Yasuda Asset Management Co. in Tokyo ``The situation is reminiscent of Japanese banks in the 90s.''

Non-performing loans held by banks ballooned in the decade after the collapse of Japan's ``bubble'' economy as growth stagnated and the value of shares, real estate and other assets held as collateral plunged.

The Nikkei 225 lost 248.56, or 1.5 percent, to 16,268.92 at the close in Tokyo, the lowest since Sept. 18. The broader Topix index declined 25.04, or 1.6 percent, to 1,575.13.

Mitsui & Co. led companies reliant on growth in China lower after the nation's Premier Wen Jiabao indicated a plan to allow mainland investors to invest in Hong Kong will be delayed and prices of gold, oil and copper dropped.
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