Japan's Nikkei share average fell to a two-week closing low on Thursday, breaking below its 25-day moving average as worries about European debt woes hit risk appetite, with investors looking to a Spanish debt auction later in the day. Olympus Corp fell more than 20 percent after the scandal-hit company restated its earnings results on Wednesday, showing a $1.1 billion dent in its balance sheet after a 13-year accounting fraud that has engulfed the company.
The Bank of Japan likely purchased exchange-traded funds as part of its liquidity-boosting programme, traders said, but it provided only limited support. "Investors expect the BoJ to step in whenever the Topix ends the morning down at least 1 percent, but this expectation is built into positions so the rise is always short-lived," said Norihiro Fujito, a senior strategist at Mitsubishi UFJ Morgan Stanley Securities.
---- Olympus sheds over 20pc after restated results
Foreign money has flowed out of Japanese stocks as Europe wrestled with its debt problems, keeping risk aversion high. Data from Japan's finance ministry showed that foreign investors sold a net 303.9 billion yen ($3.89 billion) worth of Japanese stocks last week, their largest weekly net sale since the week through September 10. The benchmark Nikkei fell 1.7 percent to 8,377.37, dropping below its 25-moving average, which is now a resistance point around 8,488. The broader Topix index lost 1.6 percent to 725.02.
Volume was thin, with 1.54 billion shares changing hands on the main board, compared with about 1.52 billion on Wednesday. Six shares fell for every one that rose. The sea transport index was the main board's biggest loser on Thursday, falling 5 percent. Shipping companies skidded on fears of slowing global demand after the Baltic Exchange's main sea freight index dropped for a second day. Nippon Yusen fell 4.6 percent to 187 yen, Kawasaki Kisen declined 4.8 percent to 140 yen and Mitsui OSK Lines shed 5.5 percent to 273 yen. The Nikkei China 50 sub-index underperformed the broader market, losing 2.1 percent.