Tokyo stocks fall on Fed chief's pessimism

18:49, July 22, 2010      

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Tokyo stocks retreated Thursday, with the Nikkei stock index closing at an almost three-week low as a strong yen continued to weigh on some tech and export related issues and a pessimistic economic view given by Federal Reserve Board Chairman Ben Bernanke added to the dour market mood.

The 225-issue Nikkei Stock Average dropped 57.95 points, or 0. 62 percent, from Wednesday to 9,220.88, marking the lowest closing level since July 2 and a fifth straight day of decline.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange meanwhile was down 3.87 points, or 0.47 percent, to 825.48.

Brokers said stocks were being offloaded Thursday as investors' fears about the health of the U.S. economy continued to grow following Bernanke's comments at a Senate committee session stating the economic outlook for the U.S., ''remains unusually uncertain.''

Although Bernanke said the chances of a fresh downturn were not high, stocks retreated as he testified, with major averages. Analysts said some investors were surprised by the Fed chief's admission of ongoing economic uncertainty, whilst others were bemused by the tentative nature of the Fed's plans for further easing.

"Those who had expected more were disappointed after Bernanke only said the Fed stands ready to ease monetary policy further," said one Tokyo-based market analyst.

Other market players pointed towards the U.S. dollar's retreat as having a significant impact on sentiment in Tokyo, one which, coupled with a slump on Wall Street overnight more than nudged investors to dump shares Thursday.

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