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Bloomberg

Japanese stocks slumped as a report showing the nation’s economy unexpectedly fell into a recession outweighed investor optimism that Prime Minister Shinzo Abe will postpone a sales-tax increase.

All but one of the 33 industry groups on the Topix index retreated, led by consumer lenders and insurers. Toyota Motor Corp., Japan’s No. 1 company by market value, lost 2.1 percent. Central Japan Railway Co. dropped 4.6 percent after SMBC Nikko Securities Inc. cut its rating on the stock. Mitsubishi UFJ Financial Group Inc., the nation’s largest lender, jumped 2.2 percent after reporting profit that beat estimates.

The Topix tumbled 2.5 percent to 1,366.13 at the close of trading in Tokyo, its first loss in five days and the biggest drop since Oct. 2. The measure ended last week at its highest level since June 2008. The Nikkei 225 Stock Average slumped 3 percent to 16,973.80, its steepest decline since Aug. 8.

“It’s official, Japan is now in recession,” Jesper Koll, head of Japan equity research at JPMorgan Chase & Co., told Bloomberg TV. “Monetary policy is already on full blast to counter against the recession. The next move is fiscal policy, with the delay in the VAT hike next year now a virtual certainty.”

Data showed gross domestic product shrank an annualized 1.6 percent for the third quarter after a revised 7.3 percent slide in the previous period. The median estimate of analysts surveyed by Bloomberg was for a 2.2 percent expansion. Unadjusted for price changes, the economy contracted an annualized 3 percent.

Public Support

Abe’s administration is seeking to shore up public support after an April increase in the sales tax triggered the deepest contraction in more than five years. Etsuro Honda, an adviser to the prime minister, last week said another value-added tax increase would be out of the question if growth was less than 3.8 percent.

From the previous quarter, private consumption rose 0.4 percent in the July-September period, the Cabinet Office said today, missing estimates for a 0.8 percent gain. Capital spending dropped 0.2 percent in the quarter, below estimates for a 0.9 percent advance.

“The street is focusing on underlying fundamentals,” said Gavin Parry, managing director of Parry International in Hong Kong. “I would say it’s not the headline number, but the components of the GDP read. Capex is still terrible and consumption is showing a very slow recovery.”

December Vote

Abe was likely to call a vote for Dec. 14 after postponing another unpopular tax boost slated for October 2015, according to people with knowledge of his plan, who last week asked not to be identified because they aren’t authorized to speak.

Today’s GDP numbers make it “certain the tax increase will be delayed, said said Kenji Shiomura, a Tokyo-based senior strategist at Daiwa Securities Group Inc. ‘‘Investors are selling on the fact after pricing in an election.’’

The Topix Other Financing Business Index of consumer and commercial lenders dropped the most among the broader gauge’s industry groups. Orix Corp. dropped 5.1 percent to 1,555 yen. Zenkoku Hosho Co., a credit-guarantee company, declined 4.1 percent to 3,480 yen.

Toyota lost 2.1 percent to 6,825 yen, the heaviest drag on the Topix. Central Japan Railway slumped 4.6 percent to 17,120 yen after SMBC Nikko cut its rating on the stock to neutral from outperform.

Utilties Drop

Electric Power Development Co. slumped 4.6 percent to 3,960 yen, leading utilities lower. Tokyo Electric Power Co. dropped 1.6 percent to 435 yen.

Mitsubishi UFJ jumped 2.2 percent to 659 yen to be the biggest boost to the Topix. Net income climbed 9.1 percent in the six months ended Sept. 30 to 578.7 billion yen ($5 billion), beating the 525 billion-yen average estimate of five analysts surveyed.

Futures on the Standard & Poor’s 500 Index fell 0.4 percent today. The measure was little changed on Nov. 14 as it capped a fourth weekly advance.

Group of 20 leaders meeting in Australia at the weekend agreed to take measures that would boost their economies by a collective $2 trillion by 2018 as they battle patchy growth and the threat of a European recession.