Nikkei at 7-week closing low on credit fears

Nikkei at 7-week closing low on credit fears



Tokyo: The Nikkei average ended at a 7-week closing low on Monday as fears that Citigroup could post large losses on subprime-related investments raised concerns that the credit crunch may be larger than thought, weakening Asian stocks and dragging Tokyo lower.

Shares of Citigroup Inc. defied the gloom, though, to rise 5% on their first day of trade in Tokyo, which came a day after the US bank chief resigned to take responsibility for spiralling losses on subprime-related investments.

Additional selling pressure came from high-tech shares such as Softbank Corp, which became the biggest drag on the Nikkei 225 after a brokerage lowered its rating on the stock and cut the target price.

The Nikkei average fell 1.5%, or 248.56 points, to 16,268.92 — its lowest close since 18 September.

Market players were also inhibited by domestic political uncertainty after Ichiro Ozawa, head of the largest opposition party, resigned on Sunday after his Democratic Party rejected an offer from Prime Minister Yasuo Fukuda to join a new coalition and end Japan’s policy deadlock. Senior party officials were trying to persuade Ozawa to stay on.

Hong Kong’s Hang Seng index tumbled 2.8% midafternoon, while MSCI’s measure of other Asia Pacific stocks ex-Japan was down 1.4% . Tokyo’s broader Topix was down by 1.6% at 1,575.13, its lowest close in two weeks. Reuters


Tokyo: Japanese share prices fell 0.94% Monday (5 November) morning on renewed worries about the US subprime loan crisis and domestic political uncertainty, dealers said.

They said the surprise weekend decision by Japan’s main opposition leader to resign had added to the confusion over the country’s political situation, raising fresh concerns about the outlook for structural reforms.

The Tokyo Stock Exchange’s benchmark Nikkei-225 index dropped 154.84 points to 16,362.64 by the lunch break.

The broader Topix index of all first-section shares fell 13.32 points or 0.83% to 1,586.85.

Decliners outpaced gainers 1,127 to 461, with 114 issues unchanged.

Turnover dropped to 825.7 million shares from 985 million Friday morning.

“There are fresh worries that other banks may have suffered more than they have indicated and this has dragged down Japanese banking shares," said Fumiyuki Nakanishi, chief strategist at SMBC Friend Securities.

Japan’s top banks may lower their year-to-March earnings estimates when they release their midterm results this month, as there appears to be little hope the Bank of Japan will raise interest rates anytime soon, he said.

“Political instability may also dampen foreign investors’ interest in Japanese shares," Nakanishi said.

Mitsubishi UFJ Financial fell 25 yen or 2.4% to 1,027, Sumitomo Financial dropped 19,000 yen or 2.2% to 849,000 and Mizuho Financial shed 9,000 yen or 1.5% to 598,000.

Japanese retailer Fast Retailing Co Ltd was up 120 yen or 1.9% at 6,590 after the company said Friday that same-store sales at its Uniqlo casual clothing shops rose 4.2% in October from a year earlier.

Honda Motor rose 40 yen or 1% to 4,250 following a newspaper report that Japan’s second-largest automaker plans to launch its Acura line of luxury cars in Russia as early as 2008 to tap rapidly growing demand.

Other automakers were mixed. Nissan Motor was up 16 yen or 1.2% at 1,317 and Toyota Motor gained 20 yen or 0.3% to 6,500.

But Isuzu Motors dropped 14 yen or 2.3% to 595 and Mazda Motor declined 33 yen or 4.8% to 653.

Japan Airlines added 9 yen or 3.4% to 272 after the Nikkei business daily reported over the weekend that the carrier will on Tuesday post a five-fold increase in operating profit for the fiscal half-year. AFP