Japanese shares down 1.55pc by noon

TOKYO: Tokyo shares lost 1.55 percent Thursday morning, dragged down by weak US economic data and domestic political uncertainty with the prime minister facing a knife-edge no-confidence vote later in the day.

The benchmark Nikkei index fell 150.74 points to 9,568.87 by the lunch break. The Topix index of all first-section issues dropped 1.66 percent, or 13.93 points, to 825.48.

Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities, told Dow Jones Newswires that the market was filled with negative factors.

"The US data were atrocious, China still seems on course to raise rates in June, Moody's cut its rating on Greece, and Japan's politics is in shambles -- so we have all the selling factors lined up today," he said.

In New York on Wednesday the Dow Jones Industrial Average dropped 279.14 points (2.22 percent) to 12,290.65 with worries sparked by a weak jobs report from payrolls firm ADP and grim manufacturing numbers.

Japan's embattled Prime Minister Naoto Kan faces a no-confidence vote on Thursday with a sizeable revolt expected from his own party, leaving the result in the balance.

Results will be announced around 3:00 pm (0600 GMT).

Mitsuhige Akino, chief fund manager at Ichiyoshi Investment Management, said the sell-off will likely stop before the Nikkei hits 9,500.

But investors are closely watching the afternoon's no-confidence vote and Friday's US government jobs data "for a possible additional round of stock dumping," he said.

Shares in Tokyo Electric Power fell 4.01 percent to end the morning at 287 yen after hitting a new all-time low of 282 on concerns over losses from compensation for people affected by its tsunami-crippled nuclear power plant.

Tatsunori Kawai, chief strategist at kabu.com Securities, said Japan's political uncertainty and a potential reduction in its capital drove speculative trading over the utility.

Automakers were mostly down due to dismal US sales for May, with Toyota Motor falling 3.10 percent to 3,275 yen.

Copyright AFP (Agence France-Presse), 2011