Nikkei closes at 3-month low as weak euro hurts exporters

08:47, May 21, 2010      

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Tokyo stocks fell sharply Thursday with the Nikkei hitting a three-month closing low as the weakness of the euro caused export-related issues to drag and news of Japan 's economic growth did little to lift a bearish market sentiment.

The 225-issue Nikkei Stock Average dropped 156.53 points, or 1. 54 percent, from Wednesday to 10,030.31. The benchmark index fell to as low as 9,999.59 at one point, the lowest level since Feb. 10.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange was down 12.49 points, or 1.37 percent, at 898.15.

Analysts said that investors were still taking flight from risky assets including stocks over concerns of the eurozone's fiscal health and Wednesday's news that Germany would ban naked short-selling in some securities, which rattled financial markets, continued to add to fears for the European single currency which plunged to a four-year low against the U.S. dollar recently.

"Investors appear to have decided to unwind risky assets and they are now looking for any negative news that would back up that sentiment," said one senior Tokyo-based strategist.

"What's behind this is debt worries in Europe and it's true that European countries don't seem to be well coordinated in dealing with the problems. But if we were to see more slides in Tokyo shares, then it would probably be due to other factors such as a tightening of policy in China," he said.

Despite the euro's fight back from a four-year low against the dollar Wednesday as traders started to bet for the currency on beliefs the currency would gain support from monetary officials, the currency slipped 1 percent on Thursday to around 112.60 yen.

With the euro erasing earlier gains, export-related issues suffered with Canon Inc. losing 2.7 percent to 3,825 yen and Advantest Corp. retreating 2.9 percent to 2,120 yen.


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(Editor:黄蓓蓓)

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