Tokyo shares down 0.84PC by noon

TOKYO: Tokyo shares lost 0.84 percent on Thursday morning, dragged down by concerns about a Greek debt default and weaker-than-expected US economic data.

The benchmark Nikkei-225 index dropped 80.17 points to 9,494.15 by the lunch break. The Topix index of all first-section issues fell 0.60 percent or 4.97 points to 819.68.

"We can expect a stormy ride to continue with markets jittery about the two risk factors -- in Europe and the United States," Okasan Securities strategist Hideyuki Ishiguro told Dow Jones Newswires.

But he added that the Nikkei index would likely be supported at 9,440 amid speculation that long-term investor funds from Europe and Asia are steadily buying Japanese shares at cheap prices.

The euro plunged Wednesday after eurozone finance ministers failed to bridge their differences over a second debt bailout plan for Greece, against a backdrop of violent anti-government protests, as fears grew over contagion effects from a possible default.

In New York on Wednesday the Dow Jones Industrial Average dropped 178.84 points (1.48 percent), more than wiping out the prior day's gains as investors worried about weakening economic data and Greece's escalating debt crisis.

"There is a growing perception that the US economic slowdown is not temporary but a long-term issue that may take a long time to resolve," said Hiroichi Nishi, general manager of SMBC Nikko Securities.

Investors faced a series of discouraging indicators. Inflation reached an annualised 3.6 percent in May, the Labor Department said, indicating that rising prices threaten to chew away at consumers' earnings.

Meanwhile a Federal Reserve report showed that manufacturing in the New York region fared worse than expected.

Nissan Motor fell 0.74 percent to 804 yen despite a newspaper report that it and French car maker Renault are in final talks to win a controlling stake in AvtoVaz, the top automaker in Russia.

The possibility of the Renault-Nissan alliance taking a higher stake in the Russian company had already been priced in, brokers said.

"Growth can only be achieved in emerging markets and the only option for expansion is M&As (mergers and acquisitions)," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

But he said investors cannot buy Nissan shares on this report alone until concerns about the global economic outlook recede.

Tokyo Electric Power, the operator of the crippled Fukushima Daiichi nuclear power plant, slipped 2.43 percent to 321 yen after soaring more than 70 percent this week to Wednesday.

Copyright AFP (Agence France-Presse), 2011