Nikkei falls 1.78% on Middle East turmoil, Moody's downgrade (2)

21:01, February 22, 2011      

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And whilst some analysts maintained that Tuesday's sell-off could not be directly attributed to the uprisings in the Arab world, they noted that the turmoil could cause oil prices to keep rising, which could have a long-term affect on investor sentiment.

One Tokyo-based strategist noted that if oil prices were to keep rising then consumer sentiment could be dampened and an increase in crude oil prices would most likely mean higher prices for consumer goods, which in turn could trigger inflation issues in developing economies.

The 225-issue Nikkei Stock Average plunged 192.83 points from Monday to 10,664.70, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange fell 17.93 points, or 1. 84 percent, to 956.70.

Compounding negative sentiment on Tuesday, ratings agency Moody 's Investors Service Inc. lowered its outlook on Japan's sovereign debt to "negative" from "stable" and warned it may cut Japan's credit rating, citing concerns about the government's policies to manage the nation's monumental public debt.

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