Tokyo stocks fall on European debt fears

08:29, May 12, 2010      

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Tokyo stocks slipped on Tuesday on fears the European Union and IMF's rescue package for Greece may not be able to contain the debt crisis from spreading in the eurozone.

The 225-issue Nikkei Stock Average dropped 119.60 points, or 1. 14 percent, from Monday to 10,411.10.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange was down 12.54 points, or 1.33 percent, to 932.10.

Following the market's advance yesterday on news the European Union had agreed an emergency loan package for Greece totaling 1 trillion U.S. dollars, brokers said Tuesday concerns remain about sovereign debt spreading in the eurozone, dragging the currency down and wreaking havoc on major European economies.

Fears are also rife about Athens' ability to implement budget cuts as part of the deal and strategists said the negative impact on the euro weighed on investor confidence Tuesday and investors took to short-covering rather than buying, with the euro trading in the upper 117 yen zone in Tokyo, down from 119 yen region on Monday.

"Weakness in the euro is weighing on investor confidence. There are concerns whether the crisis plan will really come to fruition because each country still has to discuss it," said Yutaka Miura, a senior technical analyst at Mizuho Securities.

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