Tokyo stocks down 0.19pc by noon

TOKYO: Tokyo stocks fell 0.19 percent Wednesday morning, giving up early gains on an overnight surge on Wall Street and the yen's slight drop after a downgrade by Moody's of Japanese sovereign debt.

The benchmark Nikkei-225 index of the Tokyo Stock Exchange, which opened up 0.91 percent, lost steam as most other Asian markets fell.

It ended the morning session down 16.25 points at 8,716.76 and the broader Topix index of all first-section issues lost 1.72 points or 0.23 percent to 748.67.

Hiroyuki Fukunaga, CEO of Investrust, said Tokyo stocks lost ground as investors expected US stocks would fall back on Wednesday.

"The stubbornly strong yen and softened sentiment following the Moody's downgrade of Japan government bonds is also contributing to the decline," he told Dow Jones Newswires.

The yen weakened only slightly after Moody's lowered Japan's government bond rating to Aa3 from Aa2.

"Moody's move will put added pressure on the government to raise taxes," said Kazuhiro Takahashi, general manager of investment strategy and research at Daiwa Securities.

"But in terms of the stock market reaction, it will likely be limited as it has been widely expected," he said.

Support for the stock market includes positive economic data from the eurozone and China as well as an overnight rally in US stocks, Takahashi said.

US stocks surged strongly on Tuesday, boosted by growing hope that the US Federal Reserve would take more aggressive easing measures to kick-start a sluggish economy.

The Dow Jones Industrial Average packed on 322.11 points (2.97 percent) to finish at 11,176.76.

The dollar was trading at 76.77 yen in Tokyo midday trade, compared with 76.66 before the Moody's announcement.

Nintendo, which gained 8.44 percent Tuesday amid hopes that its struggling 3DS console would finally take off, fell 3.20 percent to 12,680 yen.

Copyright AFP (Agence France-Presse), 2011