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Nikkei drops by 5.5% over global slump

Nikkei drops by 5.5% over global slump
AP
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First Published: Thu, Oct 23 2008. 10 11 AM IST
Updated: Thu, Oct 23 2008. 10 11 AM IST
Tokyo: Japanese shares dropped sharply for a second day on Thursday, tracking another drop on Wall Street, as jittery investors dumped stocks on growing worries over a slump in the global economy and weak corporate earnings.
The benchmark Nikkei 225 stock average pared earlier losses to sink 478.95 points, or 5.5%, to 8,195.74 at the close of morning trading. At one point, it was down 7.6%.
“Selling on Wall Street triggered yet another selling in Tokyo,” said Kazuhiro Takahashi, equity strategist at Daiwa Securities SMBC Co. Ltd. “Sentiment remained depressed as weak corporate earnings intensified worries over a slowdown in the global economy.”
On Wednesday in New York, the Dow Jones industrial average tumbled 5.7% to 8,519.21.
Investors in Japan are worried that US economy, a vital export market, is sliding into a recession. Hundreds of US companies are reporting third-quarter results and many are issuing murky forecasts, stirring unease.
For example, Wachovia Corp., which is being bought by Wells Fargo & Co., reported that it swung to a huge loss in the third quarter, while drugmaker Merck & Co. said its quarterly profit fell 28% and that it would cut more than 10% of its work force.
Investors in Tokyo also traded with caution ahead of the release of Japanese corporate earnings that start in earnest next week with Canon Inc. on Monday and Honda Motor Co. on Tuesday. Japanese electronics powerhouse NEC Corp. have downgraded their earnings estimates amid an economic downturn at home and abroad.
The broader Topix index was down 4.8% to close at 846.32 in the morning session.
Japan’s top automaker Toyota Motor Corp. lost 4.2% to 2,070 yen, and Honda plunged 8.2% to 2,075 yen. Sony Corp. lost 8% to 2,255 yen.
Japan’s largest brokerage, Nomura Holdings Inc., lost 6.4% to 1,153 yen.
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First Published: Thu, Oct 23 2008. 10 11 AM IST
More Topics: Japan | Market Crisis | Nikkei | Yen | Money Matters |