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Japanese stocks fell the most in two weeks after a report showed U.S. employment stagnated, stoking concern the world’s biggest economy may slip into a recession and damping the earnings outlook for Asian exporters.
Honda Motor Co. dropped 4.7%.
Mitsubishi UFJ Financial Group Inc. (8306) dropped 2.3% after banks fell in the U.S.
Komatsu Ltd. (6301) fell 5.4% after Citigroup Global Markets Japan Inc. lowered its rating on the stock to “hold” from “buy,” citing a drop in its share of the Chinese market amid competition with local manufacturers.
The Nikkei 225 (NKY) Stock Average fell 1.9% to 8,784.46, the biggest drop since Aug. 19. The broader Topix index declined 1.8% to 755.82.
The Topix has lost about 16% this year as concerns about an economic slowdown in the U.S. and Europe’s debt crisis damped demand in two of Japan’s biggest export markets.
European stocks tumbled, with the Stoxx Europe 600 Index posting its biggest two-day drop since March 2009, as investors speculated that support for bailing out Europe’s indebted nations may fade.
Deutsche Bank AG (DBK) and Credit Suisse Group AG (CSGN) both tumbled more than 8% after the U.S. sued 17 lenders to recoup $196 billion and the cost of insuring against default in Europe surge to a record.
Clariant AG (CLN) led chemical makers lower, tumbling 16% after the company cut this year’s earnings forecasts.
Merkel’s party suffered its fifth election loss this year after the Chancellor failed to sway voters in her home state with a campaign based on her handling of the euro area’s debt crisis.
The Social Democrats, the main opposition party nationally, took 35.7% in Mecklenburg- Western Pomerania, while Merkel’s Christian Democratic Union had 23.1%, its worst result since voting began in 1990.
Among European lenders, the FHFA claimed Fannie Mae and Freddie Mac bought $14.2 billion from Deutsche Bank, $14.1 billion from Credit Suisse, $30.4 billion from RBS, $6.2 billion from HSBC Holdings Plc (HSBA), $4.9 billion from Barclays Plc (BARC) and $1.3 billion from Societe Generale (GLE) SA. The FHFA sued UBS AG (UBSN) in July. HSBC slid 3.8%, Barclays lost 6.7% and Societe Generale sank 8.6%.
Banks also fell as the premium they pay to borrow in dollars for three months through the swaps markets climbed to the most since December 2008, a sign that Europe’s lenders may be struggling to get funding.
France’s Arkema retreated 8.2%, Germany’s Wacker Chemie AG dropped 7.3% and Amsterdam-based Akzo Nobel NV sank 6.7%.
US stocks were closed in observance of Labor Day.
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