Tokyo stocks plunge as oil price slump sparks fears (Third Lead)

Tokyo, Feb 3 (IANS) Tokyo stocks closed sharply lower on Wednesday, with the benchmark Nikkei index tumbling more than three percent as a continued slump in oil prices led to a sell-off on concerns of a slowdown in the global economy.

The 225-issue Nikkei Stock Average lost 559.43 points, or 3.15 percent, from Tuesday to end the day at 17,191.25, Xinhua reported.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange, lost 45.77 points, or 3.15 percent, to finish at 1,406.27.

Local brokers said the effects of the Bank of Japan’s latest monetary easing measures were wearing off, with investors initially influenced in early trading by Wall Street’s negative close overnight, with a drop in oil prices weighing heavily on both domestic and global sentiment.

Traders here also said a comparatively firm yen versus its US counterpart, also contributed to a risk-off mood, with a wide range of issues being off-loaded, including exporter-linked shares, which are sensitive to currency fluctuations.

With the US dollar fetching 119.58 yen, down from 120.01 yen on Tuesday in New York and 120.96 yen on Monday, exporter issues were dumped as their value increases on a weaker yen, as the companies’ overseas profits’ are augmented on favourable exchange rates when repatriated.

Energy and resource-linked shares also took a battering, as the prices for crude oil continued on a downward trajectory.

“With the oil price falling, material-related companies in the steel sector or oil refining companies are being effected and this is bringing things down. Oil faces problems both on the demand and supply side,” Chihiro Ohta, general manager of investment information at SMBC Nikko Securities Inc. was quoted as saying.

As such, Cosmo Energy Holdings fell 1.2 percent to 1,253 yen, oil exploration giant Inpex dropped 1.55 percent to 984.9 yen and steelmaker JFE Holdings plunged 7.41 percent to close at 1,411.5 yen.

IHI was a notable decliner on Wednesday, plummeting 20.2 percent to 197 yen, after the maker of heavy machinery posted losses for the business year through March, following being hampered by construction delays.

Mitsubishi fell 6.9 percent to 1,763.00 yen, after announcing a 24 percent year-on-year decline in net profit for the April-December period.

Among exporters, Toyota shares reversed 5.53 percent to 6,900 yen, while Nissan skidded down 4.82 percent to 1,124 yen. Consumer electronic behemoth Sony, meanwhile, relinquished 2.56 percent to close at 2,623.5 yen.

Nintendo ended down 1.7 percent to 16,885 yen, after the game and console maker announced a decline in net profit for the nine months through December, and heavily-weighted SoftBank dropped 4.87 percent to close at 4,996 yen.

Fast Retailing, another heavyweight on the market, fell 1.66 percent to 36,620 yen, and among financial issues, Mitsubishi UFJ dropped 4.59 percent to close the day at 551.8 yen.

All industry categories apart from oil and coal products on the main section retreated, most notably equities, iron and steel, and machinery-linked shares, with declining issues pummelling advancing ones by 1,735 to 164, while 36 remained unchanged.

Trading volume on the main section increased to 3,103.82 million shares from Tuesday’s volume of 2,771.48 million shares and the day’s turnover was 3,139.6 billion yen ($26.25 billion).

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