TOKYO: Tokyo stocks closed 1.26 percent at a three-week low Monday, weighed by news that North Korean leader Kim Jong-Il had died as well as continuing woes over the European debt crisis.
The Nikkei 225 index at the Tokyo Stock Exchange lost 105.60 points at 8,296.12, the lowest finish since November 28. The Topix of all first section shares fell 0.99 percent or 7.18 points to 716.38.
The official Korean Central News Agency (KCNA) said Kim "passed away from a great mental and physical strain" at 8:30 am on Saturday (2330 GMT Friday), while on a train for one of his "field guidance" tours.
KCNA said Kim died of a "severe myocardial infarction along with a heart attack".
The Nikkei briefly fell to 8,272.26 soon after the announcement amid fears of political instability, but they recouped some of those losses, while the KOSPI index in Seoul slumped almost five percent at one point before recovering slightly.
"The market has settled down after the initial selloff, as Korean shares seemed to have recovered at bit," said Yoshihiro Okumura, general manager of research at Chibagin Asset Management.
"Aside from the political uncertainty in Asia, we're now looking for signs of more recovery in the US market for additional stock buying cues," he told Dow Jones Newswires.
European sovereign debt problems also weighed on the Tokyo market, said Hiroichi Nishi, general manager of the equity division at SMBC Nikko Securities.
On Friday, Moody's Investors Service downgraded Belgium's credit rating by two notches.
Fitch Ratings lowered its outlook on France's triple-A rating to negative from stable and placed six eurozone nations, including Spain and Italy, on watch for downgrade.
"Downgrades don't really surprise us these days, but they will still weigh on sentiment," Nishi said.
Eurozone finance ministers will hold talks on the debt crisis later Monday to flesh out plans made at a Brussels summit this month to save the European currency.
Sony fell 3.01 percent and Nintendo dropped 2.85 percent.
But Nissan Motor soared 2.09 percent after announcing it will make its subsidiary Aichi Machine into a wholly owned unit.
"While its competitors are floundering, Nissan is steadily taking steps to become more competitive and position itself for growth," analysts at Credit Suisse write in a client report.
"The greater freedom Nissan seems to have compared to its competitors is positive," it said.
The euro bought $1.3007 and 101.38 yen in Tokyo afternoon trade Monday, compared with $1.3032 and 101.37 yen in New York late Friday.
The dollar firmed to 77.93 yen from 77.81 yen.
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