Japan's Nikkei closes down 2.51pc on global economic fears

TOKYO: Japan's Nikkei index tumbled 2.51 percent Friday to hit a fresh five-month low on deepening worries about the global economy dipping into recession, and as a strong yen hit exporters.

The headline index at the Tokyo Stock Exchange lost 224.52 points to 8,719.24, its lowest close since March 15 when shares tumbled in the wake of the March 11 earthquake, tsunami and a nuclear crisis.

Sentiment was also rattled Friday by a 6.8 magnitude earthquake that struck before the market close, close to the epicentre of the devastating March 9.0 magnitude event, according to the Japan Meteorological Agency.

The tremor triggered a tsunami advisory that was later lifted, as the Nikkei plunged to a low of 8,707.47 before recovering slightly.

The Topix index of all first-section shares closed down 2.04 percent, or 15.62 points, to 751.69.

A strong yen, standing at 76.50 to the dollar from 76.52 overnight in New York, also weighed on sentiment and encouraged selling in exporter shares, dealers said.

Shares faced pressure after European and US stocks fell sharply on weak US economic data and renewed concerns about the eurozone debt crisis, analysts said.

The Dow Jones Industrial Average closed down 3.68 percent following an earlier rout on Europe's bourses. New York's broader S&P 500 sank 4.46 percent, while the tech-heavy Nasdaq Composite tumbled 5.22 percent.

The feared global slowdown and a strong yen threaten the fragile post-earthquake recovery of the world's number three economy, analysts say.

"The deterioration in the global economy will shatter expectations for Japan's V-shaped recovery," said Yutaka Shiraki, a senior equity strategist at Mitsubishi UFJ Morgan Stanley Securities.

The strong yen pressured Japan's automakers, amid concerns that more Japanese production will be forced to move overseas in order for products to remain competitive.

In a research note, Credit Suisse said Japan's auto sector faces likely restructuring, including eliminating yen-denominated costs, if the Japanese unit remains at current levels or further strengthens.

Honda Motor dropped 3.33 percent to 2,403 yen, Toyota Motor slipped 1.38 percent to 2,768 -- a more than two-year low -- and Nissan Motor plunged 4.39 percent to 653.

Firms with exposure to Europe were also hit as the yen strengthened. Nikon was off 5.84 percent at 1,610, Canon fell 2.39 percent to 3,465 and Sony slumped 3.15 percent to 1,594.

The euro stood at $1.4310 and 109.47 yen, from $1.4337 and 109.70 yen in New York.

Copyright AFP (Agence France-Presse), 2011