Tokyo - Tokyo stocks tumbled 2.71 percent at the close Monday after the safe-haven yen soared on weekend news that Cyprus plans to tax bank depositors as part of a controversial bailout deal.
The benchmark Nikkei 225 index was down 340.32 points at 12,220.63 while the Topix index of all first-section issues shed 2.22 percent, or 23.31 points, to 1,028.34.
“Even though the bailout of Cyprus (and subsequent levy on Cypriot bank deposits) will be put to a vote, the situation could very well lead to a selloff in the euro and a more risk-off investor stance globally,” David Baran, co-CEO of asset manager Symphony Partners, told Dow Jones Newswires.
“But given the expectations of the new Bank of Japan leadership, the euro is likely to fall more against the dollar than against the yen.”
He added: “Japanese equities, despite their recent rise, are nowhere near their all-time highs as are US stocks.”
As a condition for a desperately-needed 10-billion-euro ($13 billion) bailout for Cyprus, fellow eurozone countries and international creditors Saturday imposed a levy on all deposits in the island's banks.
Deposits of more than 100,000 euros will be hit with a 9.9 percent charge, and 6.75 percent for anything below that threshold.
The proposal must still be passed by parliament.
Cyprus bank customers have voiced dismay and anger that they alone of the five eurozone countries forced to seek bailouts so far were being expected to help foot the bill.
A stronger yen dragged the Tokyo market down as jittery investors flocked to the Japanese currency, a safe haven during times of uncertainty.
In afternoon forex trade, the dollar weakened to 94.32 yen from 95.26 yen in New York Friday, as the euro also lost ground at 121.69 yen from 124.61 yen. - Sapa-AFP