Tokyo stocks fall

A man looks at his watch as he passes an electronic board displaying a graph of currency rates outside a brokerage in Tokyo.

A man looks at his watch as he passes an electronic board displaying a graph of currency rates outside a brokerage in Tokyo.

Published Jun 3, 2013

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Tokyo - Tokyo stocks dropped 3.72 percent to a six-week low on Monday as Japan's premier bourse continued its slide following sharp falls on Wall Street with weak China data also weighing on the market.

The benchmark Nikkei 225 index closed down 512.72 points at 13,261.82, the lowest since April 18, while the Topix index of all first-section shares fell 3.42 percent, or 38.83 points, to 1,096.95.

“A major factor behind today's big decline was Friday's fall on Wall Street,” Kenzaburo Suwa, strategist with Okasan Securities, told AFP.

“On top of that, Japanese shares are still in the middle of adjustment following the recent surge.

“The market is trying to find a short-term bottom, which has yet to be seen.”

The Tokyo market, which was down about five percent over last week, has seen wild volatility recently including a jaw-dropping one-day plunge of 7.3 percent, the worst fall since Japan's quake-tsunami disaster two years ago.

Some analysts have been predicting a sharp correction in the Nikkei which had surged about 80 percent over the past six months to climb above the 15,000 level before the recent downturn.

The rally was led by a sharply weaker yen which has come in lockstep with economy-boosting plans from Prime Minister Shinzo Abe and his hand-picked team at Bank of Japan, whose easing policies helped pushed down the unit.

“Retail investors... closed out positions as a result of both the recent sharp market falls and the overall uncertain investing environment,” Okasan Securities strategist Hideyuki Ishiguro told Dow Jones Newswires.

The Nikkei's loss on Monday expanded in afternoon trade as HSBC said Monday China's manufacturing activity shrank more than first reported in May, confirming the first contraction in seven months.

Separate data Monday confirmed that Japanese firms remain cautious with capital investment falling 3.9 percent in the first quarter of the year even as the yen's decline helped domestic firms become more competitive overseas and stoked confidence in the Japanese economy, the world's third-largest.

On Wall Street, the Dow Jones Industrial Average shed 1.36 percent to close at 15,115.57 on Friday after a flurry of mixed indicators sparked volatile trade in the last session of the month.

The Commerce Department reported that consumer spending dropped by 0.2 percent last month, the first monthly fall since May 2012, while the University of Michigan's consumer confidence barometer rose to a better-than-expected 83.7, the highest since July 2007.

In Tokyo stock trading, major exporters lost ground as Sony dropped 5.41 percent to 1,938 yen while Sharp's volatile shares plunged 10.29 percent to 427 yen. Toyota was down 3.32 percent at 5,810 yen.

Japan Airlines slipped 0.57 percent to 5,190 yen after the airline reportedly finding a fault with a modified Dreamliner over the weekend. Rival All Nippon Airways was down 3.75 percent to 205 yen.

In forex markets, the dollar bought 100.40 yen, gaining from 100.37 yen in New York late Friday, while the euro was also stronger against the Japanese currency at 130.62 yen from 130.44 yen last week. - Sapa-AFP

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