TOKYO: Tokyo stocks fell 0.83 percent on Wednesday morning, giving up early gains that stemmed from hopes that EU leaders would act to aid weak banks.
The Nikkei index at the Tokyo Stock Exchange opened up 0.42 percent after a late rally on Wall Street following a Financial Times report that European Union ministers were studying plans to help vulnerable banks.
But Tokyo lost steam quickly with the Nikkei falling 70.41 points to 8,385.71 by the lunch break. The broader Topix index of all first-section issues lost 8.99 points or 1.22 percent to 727.19.
While Wall Street's positive showing helped improve regional sentiment, many traders were wary of piling back into equities amid the debt crisis in Europe and a dim global growth outlook, brokers said.
"The market is going to treat this (US) rally with suspicion because there's no detailed plan (to contain the European debt crisis) yet," said BBY senior institutional trader Peter Copeland in Sydney. "At the moment it's talk and nothing has been implemented," he told Dow Jones Newswires.
The euro turned down after rebounding Tuesday, tumbling $1.3280 in Tokyo morning trade from $1.3338 in New York late Tuesday.
Against the Japanese currency the euro dropped to 101.76 yen from 102.14. The common European currency briefly fell to 100.76 yen overnight, the lowest level since 2001.
The dollar sank to 76.63 yen from 76.82 yen in New York.
Exporters fell with Sony down 1.74 percent at 1,404 yen and Nissan down 2.35 percent at 663.
Softbank lost 2.31 percent to 2,364 yen as Apple shares slipped on Wall Street due to disappointment over an updated version of the iPhone.
KDDI, which will sell the latest iPhone in Japan breaking Softbank's exclusive hold on the popular smartphone, was down 0.53 percent to 555,000.
On Wall Street Tuesday the Dow Jones Industrial Average rocketed in the final minutes to end up 1.44 percent at 10,808.71.
France and Belgium stepped in Tuesday to guarantee the financing of troubled cross-border bank Dexia as its shares plunged spectacularly ahead of confirmation that it is to be broken up.
The two states, shareholders in a bank that specialises in investing in local government funds, acted as Dexia faced the threat of becoming the first major European institution to fall victim to the eurozone debt crisis.
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