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Markets

Tokyo shares fall 1.21pc

TOKYO: Tokyo shares dropped 1.21 percent Tuesday on the back of a stronger yen, which hurts Japanese exporters, and re
Published August 2, 2011

tokyo-stockTOKYO: Tokyo shares dropped 1.21 percent Tuesday on the back of a stronger yen, which hurts Japanese exporters, and renewed fears that the US and global economic recovery was slowing down.

The benchmark Nikkei-225 index lost 120.42 points to end at 9,844.59. The Topix index of all first-section issues on the Tokyo Stock Exchange fell 0.91 percent, or 7.74 points, to 843.96.

The dollar fell briefly to 76.29 overnight, close to its post-WWII low of 76.25 yen on March 17, amid fears of a US debt downgrade ahead of a vote in the US House of Representatives on an emergency plan to avert a default.

But the greenback firmed in early Tokyo trade to the mid-77 yen level after news that the deal had been given the green light by Congress's lower house.

Japan's Finance Minister Yoshihiko Noda said Tuesday the yen was "strongly overvalued" as expectations grew that Tokyo would intervene to sell the safe-haven currency, which has risen in recent weeks on worries over the US debt.

"In principle, it is desirable for fundamentals to be reflected in the market, and in this sense, the yen is strongly overvalued," he told a regular news conference. "Its movement continues to be one-sided."

Masayoshi Yano, senior market analyst at Meiwa Securities, said the comments by Noda were not enough.

"Combined with the weakness in the US economy, the reason behind this stronger yen is the lack of policy from the Japanese government side," he told Dow Jones Newswires.

"We don't see any decisive stance by Japan that it will intervene in the currency markets."

Sentiment in the Tokyo market was also cooled after the US Institute of Supply Management said its indexed survey of purchasing managers stood at 50.9, down from 55.3 the previous month. A reading above 50 indicates expansion and a reading below indicates contraction.

It also showed new orders fell to 49.2 on the index.

The figures come after the US government last week released data showing the economy grew at a much slower pace than expected in the second quarter.

The stronger yen has hit Japanese export companies -- including game maker Nintendo, which fell 2.78 percent to 11,870 yen, a third straight loss.

Beverage giant Kirin Holdings was down 0.26 percent at 1,148 following a deal to buy a 50.45-percent stake in Brazil's Schincariol Group.

Honda Motor was off 0.47 percent at 3,110 despite lifting its fiscal year outlook. Toyota, which announced its quarterly results shortly after Tuesday's trading ended, lost 0.31 percent to 3,160.

Toyota said net profit plunged 99 percent in April-June on the impact of the March disasters, but raised its full year net profit forecast 39 percent on recovery hopes.

Semiconductor maker Tokyo Electron was down 6.19 percent at 260 yen after sharply lowering its fiscal year forecasts.

Copyright AFP (Agence France-Presse), 2011

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