Tokyo stocks close week at 2-month low on Greece, eurozone debt fears

19:05, May 07, 2010      

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Japan's Nikkei Stock Average plunged Friday to a two-month low mirroring a mass sell-off of global equities as investors' concerns grew over fears Greece's debt woes may spill over to other eurozone countries and the yen's rise against other major currencies took its toll on export-related issues.

The 225-issue Nikkei Stock Average plunged 331.10 points, or 3. 10 percent, from Thursday to 10,364.59, marking its lowest closing level since March 4.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange was down 24.98 points, or 2.61 percent, to 931.74.

Brokers said that investors took to offloading a broad range of shares from the get-go of trading on Friday as fears mount that Athens debt woes may spread to other southern Mediterranean countries such as Spain and Portugal.

Analysts also said that a trading glitch in New York that erased almost 1 trillion U.S. dollars off equity values and may have been exploited by market players also added to an already black mood in Tokyo.

U.S. stock exchange officials are investigating the issue.

However the Greece issue and the possible "domino effect" it could cause across Europe leading to a potential crash of the euro, predominantly dictated market activity in Tokyo on the last trading day of the week.

"The Greece debt crisis is reminding investors of what happened after Lehman Brothers' collapse. A failure by one financial institution ended up triggering a ripple effect on the global economy," said Kazuhiro Takahashi, general manager at Daiwa Securities Capital Markets.

"Investors are worried about whether the debt issues will be limited to the euro area," said another Tokyo-based strategist, adding that, "There's concern that the avoidance of spending money on risk assets will spread and people are selling in a panic. "

"Investors will put money back into risk assets when the Greece issues cool down."

The euro depreciated to as low as 110.70 yen today from 120.45 at the 3 p.m. close of stock trading in Tokyo yesterday, reducing the value of overseas income at Japanese companies when repatriated. The dollar weakened to as low as 88.26 yen from 93.86.

With the yen often seen as a safe haven in times of economic turmoil the currency's appreciation against the euro and the dollar sent export-related issues on a downward trend, particularly those of firms reliant on Europe for business.

The world's largest digital camera maker by sales, Canon Inc. fell 3.9 percent to 4,055 yen and chip-tester maker Advantest Corp. dropped 3.7 percent to 2,252 yen.

Kyocera Corp. retreated 3.9 percent to 8,750 yen and Sony Corp., relinquished more than 3 percent to close at 3,060 yen. Honda Motor Co. Ltd. fell 2.6 percent to 3,030 yen.

Nintendo Co. Ltd., the world's top maker of game consoles that gets 34 percent of its revenue in Europe, tumbled 7.7 percent to 28,300 yen after the company said Thursday t its revenue, profit and dividend will fall as the firm's flagship Wii console and software sales fall.

Nintendo said its consolidated operating profit dropped 35.8 percent from the previous year to 356.57 billion yen (3.86 billion U.S. dollars) in the year ended in March.

Financial issues, highly susceptible to economic swings, extended loses Friday with Sumitomo Mitsui Financial Group Inc. falling more than 3 percent to 2,880 yen and megabank Mizuho Financial Group Inc. slipping more than 2 percent, to 170 yen.

Fast Retailing Co. Ltd, owner and operator of the Uniqlo chain of budget apparel stores plunged 6 percent to 13,040 yen after saying domestic same-store sales at its stores fell 12.4 percent in April from a year earlier.

Fast Retailing was the biggest decliner on Friday's Nikkei 225.

Some 3.11 billion shares changed hands on the Tokyo exchange's First section, up from Thursday's volume of 2.58 billion shares.

Declining issues outnumbered advancing ones by 1,568 to 91.

Source: Xinhua


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