Japan's Nikkei average slipped to a three-week low on Thursday, losing ground for a third straight day as violence in Libya prompted a spike in oil prices, setting the stage for a further correction in the near term. The market mood was also soured by the yen's rise to a two-week high against the dollar, hurting exporters, and by capital-raising announcements by Tobu Railway and Toyobo Co that sent their shares tumbling on dilution fears.
Tokyo stocks had climbed some 14 percent since November to be one of the best performing global markets this year, and players said despite current weakness the market could still be on a rising trend longer-term. Selling accelerated in the afternoon as the benchmark fell below support around 10,500, having broken another closely watched technical support at its 25-day moving average of 10,547 at open.
The Nikkei ended the day down 1.2 percent at 10,452.71. The broader Topix lost 1.3 percent to 934.22. The sell-off was underpinned by heavy volume, with 2.6 billion shares changing hands on Tokyo stock exchange's main board, above last week's daily average volume of 2.26 billion shares.
Equity financing deals by Tobu Railway and textile firm Toyobo Co weighed on their share prices and the prospect of more such deals also hit the broader market. Tobu, a rail operator and property developer, tumbled 12.1 percent to 400 yen after it said it would raise as much as $1.1 billion in a share offering to buy back convertible bonds maturing in 2014. The offering could boost its outstanding shares by 25 percent. Toyobo tumbled 8.8 percent to 134 yen after the firm said it would raise up to $227 million by offering new shares, increasing the number of outstanding shares by up to 18.7 percent.