Tokyo stocks closed lower Monday as Italian Prime Minister Matteo Renzi's resignation sparked worries about political instability in the eurozone and beyond. The euro briefly dived to 20-month lows against the dollar on the news, which also sparked demand for the safe-haven yen - a negative for Japanese shares. Investors largely shrugged off data released Friday that showed the US unemployment rate at a nine-year low in November, virtually guaranteeing a Federal Reserve interest rate hike this month.
Tokyo's benchmark Nikkei 225 index lost 0.82 percent, or 151.09 points, to end the day at 18,274.99, while the Topix index of all first-section issues was off 0.75 percent, or 11.02 points, at 1,466.96. The euro slumped to $1.0506 in early deals, its lowest since March 2015, but it later recovered to $1.0556. And the yen, which is often bought as a safe haven in times of uncertainty, picked up in early deals. The dollar fell to 112.88 yen from 113.51 yen in New York on Friday before bouncing back to 113.52 yen in the afternoon.
Renzi announced his resignation hours after losing a referendum on constitutional reform Sunday. The defeat and Renzi's departure threatens to plunge Italy into a new phase of political uncertainty and possible economic turmoil. Some analysts fear a deeper crisis of investor confidence that could derail a rescue scheme for the country's most indebted banks, triggering a wider financial crisis across the already struggling eurozone. "(Renzi's) defeat in the face of populist moves will spawn concerns over the rest of Europe," said Yunosuke Ikeda, chief currency strategist at Nomura Securities in Tokyo.
"But given the fact that this had been predicted beforehand, it's not a surprise in the same way as the Brexit vote or (Donald) Trump's election victory. "As Prime Minister Renzi has now resigned, some investors might think all the bad news is out now." In share trading, Panasonic ended 0.16 percent higher at 1,206.5 yen after the Nikkei business daily reported that the electronics giant plans to purchase European automotive lighting company ZKW in a deal valued at about 100 billion yen.
Mobile game company DeNA fell again, dropping 5.63 percent to 3,100 yen, as it suspended its information websites over concerns about the accuracy of medical articles and other allegations. Banking giant Mitsubishi UFJ sank 2.39 percent to 708.7 yen and rival Mizuho Financial Group fell 3.30 percent to 208.3 yen, while Toyota was off 0.86 percent to end the session at 6,628 yen.
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