Japanese shares hit 16-month low on US subprime crisis

Japanese shares hit 16-month low on US subprime crisis

Tokyo: Japanese share prices plummeted below the key 15,000 points level briefly on 12 November 2007 for the first time in almost 16 months, hit by a stronger yen and worries over the US subprime loan crisis, dealers said.

The heavy losses mirrored sharp falls across Asia following another heavy sell-off on Wall Street on 9 November.

Investors were also alarmed as the dollar slid below the 110 yen level for the first time since May 2006, dimming prospects for Japanese exporters, dealers said.

The Tokyo Stock Exchange’s benchmark Nikkei-225 index fell to as low as 14,998.51 points in early afternoon trade, down about 585 points or 3.75% from the previous close.

But the market quickly managed to rebound back above the 15,000 level with the Nikkei at 15,081.55 in mid-afternoon trade, down 501.87 points or 3.22% from the previous close.

Investors “are increasingly wary of financial and economic problems in the US, which may now linger for longer than previously expected," said Hiroichi Nishi, general manger of equities at Nikko Cordial Securities.

Wall Street skidded on 9 November after major US banks said the crisis in subprime mortgages to homebuyers with patchy credit histories would cause another round of heavy losses in the fourth quarter.

Japan’s government said it was taking a close interest in the slumping stock market.

“We have to watch developments very carefully," said chief cabinet secretary Nobutaka Machimura, the top government spokesman.