Japanese shares at five-week low by noon

TOKYO: Tokyo shares lost 1.38 percent Monday morning to their lowest level in five weeks as machinery stocks and insurers dropped, brokers said.

The benchmark Nikkei index at the Tokyo Stock Exchange fell 132.25 points to 9,474.83, falling below 9,500 for the first time since April 19.

Machinery shares were hit by a Nomura Securities report projecting a pause in construction machinery demand in China, said Hideyuki Ishiguro, an investment strategist at Okasan Securities.

Insurance companies were also off sharply following weak earnings reports last week, he told Dow Jones Newswires.

Shares of Tokyo Electric Power (TEPCO), the operator of the tsunami-crippled Fukushima Daiichi nuclear plant, dived 9.26 percent to 333 yen by the lunch break.

After Friday's market close TEPCO posted a record $15 billion loss for the last business year to March and its president resigned for causing the worst nuclear crisis since the Chernobyl disaster 25 years ago.

With compensation liabilities estimated at tens of billions of dollars, the utility warned the "significant deterioration" in its financial position "raises serious uncertainty" about its ability to continue as a going concern.

The government has devised a rough scheme to help the utility compensate people affected by the nuclear crisis and called for assistance from creditor banks to the embattled company.

Investors were disheartened by the company's warning about its viability at its Friday earning's briefing, Ishiguro said.

"The government looks unlikely to reach a consensus on its financial support plan for TEPCO any time soon, and that will weigh heavily on the stock," he said.

The government needs to put a bill through parliament for its financial support for TEPCO.

US stocks tumbled Friday as investors weighed falling profits at clothing retailers Gap and Aeropostale and a downgrade on Greece's massive debt.

The Dow Jones Industrial Average slid 93.28 points (0.74 percent) to end the day at 12,512.04.

Copyright AFP (Agence France-Presse), 2011