TOKYO (Thomson Financial) - Japanese shares are expected to open lower on Monday, tracking declines on Wall Street after the U.S. government said personal incomes fell last month by the largest amount in nearly three years while consumer spending slowed, renewing concerns about the health of the economy.
The Commerce Department reported that personal incomes fell by 0.7 percent in July -- well beyond the drop of 0.1 percent that analysts polled by Thomson/IFR had predicted.
The government also said consumer spending rose a modest 0.2 percent. That was below the 0.6 percent increase seen in June and, accounting for rising prices, spending fell by 0.4 percent in July. Wall Street has been concerned about Americans' ability to help the economy grow, as high prices for gas and food have strapped many household budgets.
But economists were more pessimistic about the prospects for consumer spending.
'With the tax refund effect on spending now more or less over, we think the worst is yet to come for consumers, and we expect an outright decline in real Q3 consumption,' said Ian Shepherdson, chief U.S. economist at High Frequency Economics.
Trading in Japan is expected to be extremely light on Monday due to the Labour Day holiday in the United States.
On Wall Street on Friday, the Dow fell 171.63 points or 1.47 percent to 11,543.55. The blue chips began trading on Friday having logged a three-day advance of nearly 330 points. The Nasdaq fell 44.12 points or 1.83 percent to 2,367.52.
The Chicago-traded Nikkei futures contract settled at 12,910 points, down from 13,070 points at the Osaka Securities Exchange on Friday and suggesting a weak start for the market.
On the Tokyo bourse on Friday, the benchmark Nikkei 225 Stock Average rose 304.62 points or 2.4 percent to 13,072.87, the highest close since August 18 when the index finished at 13,165.05. The broader Topix index gained 35.18 points or 2.9 percent to 1,254.71.
Ahead, the Japan Automobile Dealers Association will release new vehicle sales data for August in the afternoon.
Stocks to watch include Mitsubishi Heavy Industries on a report the heavy machinery maker will spend some 15 billion yen ($137.8 million) to increase its production capacity for core nuclear power equipment, in order to prop up its nuclear power business.
($1=108.82 yen)
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