5:00AM New York, 7:00PM Tokyo - Rising oil prices and U.S. housing slump affects stocks.

Stocks in Japan fell as rising crude oil and commodity prices raised the spectre of mounting inflationary pressures on the economy. The rising yen also negatively impacted exporters.

Market sentiment

In Tokyo trading, Nikkei 225 dropped 2.3% or 322.01 to 13,690.19, and the broader Topix Index fell 2.4% or 32.51 to 1,344.18.

In the first section of the Tokyo Stock Exchange 8.6 billion shares worth 935 billion yen were traded and in the second section 312 million shares valued at 5.1 billion yen changed hands.

Of the Nikkei 225 stocks 12 gained, 212 declined, and 1 was unchanged. Chiyoda Corp. led the advancers in the index shares with a rise of 4.66% followed by Yahoo Japan Corp. increasing 4.56% after the company reported that it will spend 60 billion yen to buy back 2% of its total shares.

Japanese firms lose $3.2 billion in cross shareholdings

Bloomberg news reported today that Nomura Holdings Inc. strategist Kengo Nishimaya said Japanese companies lost $3.2 billion in cross shareholdings in the last fiscal year, with companies posting securities losses rising to 130 from 13 in the comparable period a year ago.

According to the report, Mitsui & Co. lost $354 million on stockholdings and missed its profit projections, while Hikari Tsushin lost $220 million from a slump in its stake in consumer lender SFCG Co.

Cross-shareholdings are mainly used by Japanese companies to buttress strategic relationships and forestall hostile takeovers.

Gainers & Losers

Chiyoda Corp. led advancers in the Nikkei 225 index shares with a rise of 4.66% followed by rises in Yahoo Japan Corp. of 4.56%, in Kumagai Gumi Co. of 3.60%, in Mitsubishi Paper of 1.31%, and Hokuetsu Paper of 1.16%.

Yahoo Japan Corp. rose after reporting that it will spend 60 billion yen in buying back 2% of its total shares.

Sanyo Electric led decliners in the Nikkei 225 index shares with a fall of 6.77% followed by losses in Mitsumi Sumitomo of 5.67%, in Bridgestone Corp. of 5.55%, in T & D Holdings Inc. of 5.31%, and Kawasaki Heavy Industries of 5.23%.

Sanyo Electric fell after crude oil prices rose 0.5% to $132.87 a barrel today.

Bridgestone Corp. fell after rubber gained 3.4% to 330.3 yen a kilogram as China Stockpiles fell by 29% to 25,200 metric tons. Yokohama Rubber also slipped 3.07% as well.

Similarly, automakers were affected by rising rubber prices. Honda Motor Corp. shed 3.29%, Mazda Motor fell 4.56% and Nissan Motor Corp. declined 2.67%.

Merrill Lynch & Co also downgraded Nissan Motor Corp. to “neutral” from “buy”.

Exporters fell as the yen rose to 103.06 from 104.06 last Friday against the dollar. Casio Computers plummeted 3.19% and Sharp fell 3.03% as a result.

US Existing home sales fall 1% in April