Japanese Stocks Fall in Record Trading; Nippon Oil, Showa Drop Japanese stocks fell as crude prices traded near a three-month low, pulling down shares of energy companies such as Nippon Oil Corp. and Showa Shell Sekiyu K.K. The Nikkei 225 Stock Average had its first back-to-back drop in almost three weeks, while the Topix index fell for the first day in six as a record number of shares changed hands. Losses were limited as companies including JFE Holdings Inc. and Millea Holdings Inc. advanced after raising their earnings forecasts. ``A continuation of oil's drop in price is going to be more of a worry than a help for stocks, suggesting that demand is waning'' for commodities, depressing materials companies earnings, said Takashi Miyazaki, a senior strategist at Mitsubishi UFJ Asset Management Co. in Tokyo, which has more than $42 billion in assets. ``What's supporting this market right now are the bright earnings projections.'' The Nikkei fell 24.87, or 0.2 percent, to 14,036.73 at the 3 p.m. close in Tokyo. The Topix index slipped 1.59, or 0.1 percent, to 1497.53. Nikkei 225 futures for December delivery were unchanged at 14,030 in Osaka and rose 0.1 percent to 14,045 in Singapore. A record 4.56 billion shares changed hands on the Tokyo Stock Exchange's first section, with 3.26 trillion yen ($28 billion) of stocks included in the Topix traded. That's 50 percent more than the daily average for the past three months. Three shares fell for every two that gained on the first section. `Straight Line' The Nikkei and the Topix fluctuated between gains and losses throughout the day as investors refrained from taking large bets before government reports on machinery orders and gross domestic product later this week, according to analysts including Yoshihisa Saito at Tokai Tokyo Securities Co. The Nikkei rose as much as 0.1 percent while the Topix climbed as much as 0.4 percent earlier. Japan's economic growth probably slowed to an annualized rate of 1.1 percent in the third quarter from 3.3 percent in the previous three-month period, according to the median estimate of 29 economists surveyed by Bloomberg. The third quarter gross domestic product data are due to be released on Nov. 11. ``With the recent gains in stocks, you can't expect the market to trade in a straight line,'' said Tokai Tokyo's Saito. ``As we monitor the economic data, the pace of gains will lose momentum from here.'' Oil Stocks Fall The Topix Oil & Coal Index, which includes Nippon Oil, was the worst performer among the Topix's 33 industry groups. Crude oil for December delivery retreated 1.8 percent to $59.47 a barrel in New York as higher-than-normal temperatures in the northern U.S. reduced demand for heating fuels. Futures have dropped 16 percent since reaching a record $70.85 on Aug. 30 and recently traded at $59.52 a barrel. Nippon Oil, the nation's biggest refiner, slid 46 yen, or 5 percent, to 868. Separately, the company said it will scale back its crude oil processing plans for this month, as temperatures in November are expected to be warmer than last year, reducing demand for kerosene and other fuels. Showa Shell, the Japanese refining unit of Royal Dutch Shell Plc, lost 42 yen, or 3 percent, to 1,354. The company in August raised its full-year profit forecast as rising oil prices bolstered the value of the company's inventories. `Seasonal Factors' ``Moves in oil prices are prompting people to sell energy stocks,'' said Junichi Minami, an oil analyst in Tokyo at Meiji Dresdner Asset Management Co., which managed the equivalent of $11.6 billion as of September 2004. ``There are some seasonal factors playing a role in the price of oil and that's causing some concern.'' By contrast, the measure tracking steelmakers was the best performer, jumping 6.2 percent. JFE led gains by steelmakers after Asia's second-largest maker of the alloy raised its full-year profit forecast by 7 percent and increased its annual dividend, citing higher prices to carmakers and shipbuilders. JFE jumped 290 yen, or 7.7 percent, to 4,050. Nippon Steel Corp., the nation's largest steelmaker, advanced 24 yen, or 5.7 percent, to 448. Sumitomo Metal Industries Ltd., the nation's third-largest, surged 39 yen, or 9.3 percent, to 460. Millea, Japan's largest property and casualty insurer, climbed 70,000 yen, or 3.2 percent, to a record 2.24 million. It had 38 billion yen of first-half profit, exceeding its own forecast, after collecting more premiums at its life insurance unit, the company said in a preliminary earnings statement yesterday. It is scheduled to announce final results on Nov. 22. `Big Surprise' ``Millea's earnings result was a big surprise as investors didn't expect much,'' said Masaki Iso, who oversees $7.6 billion at Yasuda Asset Management Co. in Tokyo. Net One Systems Co., a computer network company, surged 29,000 yen, or 13 percent, to 252,000, the biggest advance in the Morgan Stanley Capital International World Index. The company posted fiscal first-half profit that beat its own forecast. Banks stocks, which have been the best performer as a group over the past three months, with the Topix Banks Index surging 58 percent, were the biggest contributor to the broad benchmark's decline as some analysts said their gains have outpaced their earnings prospects. Mitsubishi UFJ Financial Group Inc., the world's largest lender by assets, lost 30,000 yen, or 1.8 percent, to 1.62 million. Resona Holdings Inc., Japan's fourth-largest lender, sank 9,000 yen, or 2.3 percent, to 386,000. ``Early August we went heavily overweight in financials,'' said John Vail, chief Japan equity strategist at JPMorgan Chase & Co.'s brokerage unit in Tokyo. ``We're starting to become a little nervous. All in all a lot of the good news is in the price right now.'' Elsewhere, Fujitsu Ltd., a network system maker, jumped 44 yen, or 5.7 percent, to 823. The Tokyo bourse yesterday said insufficient upgrade instructions by Fujitsu caused the shutdown of its stock-trading system last week, adding that it has yet to decide whether to seek compensation from the company. ``The market might be taking a bet that Fujitsu won't face big financial damage from the incident after all,'' said Masaya Yamasaki, an analyst at Nomura Holdings Inc. in Tokyo. ``That might have helped the stock today.'' Fujitsu Ltd. (6702 JT) JFE Holdings Inc. (5411 JT) Millea Holdings Inc. (8766 JT) Mitsubishi UFJ Financial Group Inc. (8306 JT) Net One Systems Co. (7518 JT) Nippon Oil Corp. (5001 JT) Nippon Steel Corp. (5401 JT) Resona Holdings Inc. (8308 JT) Showa Shell Sekiyu K.K. (5002 JT) Sumitomo Metal Industries Ltd. (5405 JT) PIN/BLOOMBERG