Sustained worries over the European debt crisis weighed on Japanese shares in a holiday-shortened week to Thursday, marking its third straight weekly loss with no immediate end to the problem in sight. Global scepticism about European leaders' efforts to resolve the region's paralysis will likely chill risk appetite in the final trading week of the year, as investors leave for holidays.
In the four-trading day week to December 22, the benchmark Nikkei 225 index at the Tokyo Stock Exchange lost 1.66 percent or 141.30 points from a week ago to 8,395.16.
The Topix index of all first section shares ended nearly flat, losing 0.44 points to 723.12. The death of North Korean leader Kim Jong-Il, announced by Pyongyang's official media on Monday, caught investors offguard and temporarily depressed Asian shares.
The European Central Bank's programme to offer cheap loans to eurozone banks might have eased their funding constraints. But many players still doubt whether the operation will be enough to unclog credit markets and ease the region's debt crisis, said Fumiyuki Nakanishi, general manager of investment and research at SMBC Friend Securities.
"It's unclear if banks will use the funds to buy sovereign bonds whose yields remain elevated and how ratings firms evaluate banks that have made such purchases," he said. "The crisis isn't over."
Japanese and international markets will likely lack clear direction next week, as investors take holidays. The Tokyo bourse will close Friday for a national holiday, while the US and other major international markets will close Monday for Christmas. Many Western markets will also be closed on Tuesday.
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