TOKYO: Tokyo stocks fell 0.13 percent Tuesday morning, recouping most of their early losses as investors digested news that US lawmakers had failed to agree on a debt-slashing deal.
The Nikkei 225 index at the Tokyo Stock Exchange, which closed at its lowest level since March 2009 on Monday, lost a further 10.75 points to 8,337.52 by the lunch break.
The Topix index of all first-section issues was up 0.12 percent or 0.85 points to 717.93.
In New York on Monday the blue-chip Dow Jones Industrial Average closed down 2.10 percent as a US Congress "supercommittee" failed to reach a deal to rein in the nation's huge deficit.
But Tokyo stocks rebounded slightly by the midway point, Daiwa Securities senior market analyst Yumi Nishimura said, adding the committee's failure had already been priced in on Monday.
Hirochi Nishi, general manager at the equity division at SMBC Nikko Securities, said "the market is looking quite oversold on a fundamental valuation basis."
"But participation levels are low considering the prevailing external uncertainties and ahead of Japan's national holiday (Wednesday)," he said.
Nishimura of Daiwa also said that "some concerns receded over a potential US rating downgrade after comments from rating firms".
Moody's confirmed its AAA rating on the United States while Standard & Poor's said its ratings would not change because of federal lawmakers' latest failure.
Fitch said it would wait until the end of the month to make its review of the US sovereign rating.
Exporter shares rose as the yen eased against the dollar. Honda gained 1.57 percent to 2,187 yen and Sony was up 3.23 percent at 1,307 yen.
The dollar firmed to 77.16 yen in Tokyo midday trade from 76.92 yen in New York late Monday. The euro bought $1.3499 and 104.05 yen, compared with $1.3494 and 103.83 yen in New York.
Daio Paper jumped 5.29 percent to 537 yen as prosecutors arrested the grandson of its founder after he allegedly spent millions of dollars of group companies' cash at foreign casinos.
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