Tokyo stocks down 0.71pc by noon

TOKYO: Tokyo stocks lost 0.71 percent Tuesday morning with a strong yen denting exporters following sell-offs on other bourses over fears that eurozone and US debt problems could trigger a fresh global crisis.

The benchmark Nikkei index fell 70.89 points to 9,903.58 by the lunch break in post-holiday trading. The Topix index of all first-section issues dropped 0.63 percent, or 5.40 points, to 853.96.

The dollar was flat at 79.08 yen, with the Japanese unit's strength weighing on Canon, which fell 2.5 percent to 3,690 yen, and Sony, which fell 2.28 percent to 2,092.

In New York on Monday the Dow Jones Industrial Average fell 92.34 points (0.74 percent) to close at 12,387.39.

Top Democratic and Republican senators were struggling to forge a compromise deal to raise the federal government's debt ceiling by August 2 in order to avert a potentially disastrous default.

On the other side of the Atlantic, the eurozone's leaders were preparing for an emergency summit on Thursday aimed at preventing a default by Greece, which could have destabilising effects on larger European economies.

Yutaka Miura, senior technical analyst at Mizuho Securities, said "the eurozone debt issue and the stalemate in US debt ceiling talks continue to be the main movers of currency rates and, in turn, Japanese equities."

Banks fell on profit taking and utilities also faced selling pressure amid mounting concerns over electricity shortages in Japan, said Kazuhiro Takahashi, general manager of investment strategy and research at Daiwa Securities.

Kansai Electric Power tumbled 5.0 percent to 1,368 yen after the utility halted operations at one of its nuclear reactors due to a cooling system problem, leaving 18 of Japan's 54 reactors in operation.

Mitsubishi UFJ Financial Group lost 2.54 percent to 383 yen and Sumitomo Mitsui Financial Group was down 1.27 percent at 2,404 following losses in US and European financial shares on concerns last week's "stress tests" on European lenders were not stringent enough, dealers said.

Takahashi added that "the debt problems in Europe and US are both long-term issues, so for shorter-term trading cues, the market is keenly watching a flood of major US earnings this week."

Amid the downtrend, companies linked to Japan's World Cup winning women's football team drew buying interest.

Sporting goods maker Mizuno rose 1.60 percent to 380 yen. Plenus, a food chain operator and official sponsor, gained 0.94 percent to 1,386.

Copyright AFP (Agence France-Presse), 2011