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Wednesday November 28, 1:54 PM
Tokyo stocks weak in afternoon; banks slide
(Updates to late afternoon)
sg.biz.yahoo.com
TOKYO, Nov 28 (Reuters) - Tokyo stocks were sharply lower by late afternoon on Wednesday after a corporate failure chilled sentiment and a retreat on Wall Street cued investors to take profits in several high-tech issues including Canon Inc <7751.T>.
"Its hard to tell if U.S stocks will now enter a correction phase and if so, for how long," said Masatoshi Sato, manager of the equity division at Mizuho Investor Securities. "Those concerns have put a quick halt on the tech sector's recent advance."
Late Tuesday's news that heavy machinery maker Niigata Engineering Co Ltd <6011.T> had gone under and an announcement during the midday break that Standard and Poor's (S&P) was lowering its credit ratings on Japan were also weighing on banking stocks and broader market sentiment, traders said.
The benchmark Nikkei average <.N225> lost 2.20 percent or 241.32 points to 10,707.57 by 0524 GMT, extending Tuesday's 1.04 percent retreat.
Traders said the Nikkei was due for a pullback after rising on Tuesday to a three-month intraday high of 11,186.75, which marked a recovery of more than one-third of what the average lost from its May 7 high to its September 21 low.
The capital-weighted TOPIX index <.TOPX> gave up 2.16 percent or 23.37 points to 1,056.22.
The banking sector subindex <.IBNKS.T> was down 4.37 percent amid concerns, rekindled by Niigata's failure, that banks would have to boost provisions against bad loans due to borrowers' higher credit risks.
"Until just recently, Niigata's failure might have been taken by the market as a sign of progress on the bad-loan mess. But sentiment is much weaker now and banks are being hit accordingly," said Sato.
Mizuho Holdings Inc <8305.T>, the world's largest bank by assets, plunged 7.02 percent to 318,000 yen, extending a 4.47 percent fall on Tuesday.
S&P lowered its long-term local and foreign currency sovereign credit ratings on Japan to double-A from double-A-plus.
It also said it may cut the long-term ratings of 10 top banks and long-term and short-term ratings of two trust banks, citing worries about their asset quality.
Among tech issues to lose ground, Canon -- Japan's top maker of office equipment -- slid 3.27 percent to 4,140 yen after touching a three-month high in the previous session.
Sony Corp <6758.T> gave up 2.33 percent to 5,870 yen, sold also on concerns about U.S. demand following a weak consumer confidence reading for November, which helped push the Dow Jones average <.DJI> down 1.10 percent.
Sony counts on the U.S. for one-third of its sales. |
