Monday October 5, 3:31 am Eastern Time
Nikkei closes at lowest level since January 1986
TOKYO, Oct 5 (Reuters) - Tokyo stocks wilted on Monday to close below 13,000 for the
first time since January 1986 amid disappointment that the Group of Seven's weekend
meeting offered no concrete plan to restore the global economy's health.
The benchmark Nikkei average fell 275.57 points or 2.08 percent to 12,948.12. Nikkei
December futures fell 310 to 12,950.
The TOPIX index of all first-section shares fell 17.33 points or 1.71 percent to 996.69. It is the first time the TOPIX has fallen
below 1,000 since November 1985.
''If the G7 nations want to restore confidence in global stock markets, coordinated interest rate cuts will be necessary,'' said
Kazue Mayuzumi, deputy chief operating officer at Nikko Securities. ''But there is no sign the Europeans will reduce their
rates.''
He said global investors were shifting to bonds amid spreading concern over deflation.
Uncertainty over prospects for the use of public money for Japan's ailing banking sector also undermined sentiment, even
though the Lower House of parliament passed financial bills on Friday under pressure from abroad, traders said.
The International Monetary Fund (IMF) urged action by Japan to sort out the weak banking sector and take action to revive its
flagging economy.
''The key is how much public money will be injected to banks and how soon,'' said Fiachra MacCana, head of equity research
at West LB Securities. He said he was sticking to his predicition that the Nikkei will slip to 12,000 in the near future.
Mounting appraisal losses resulting from the slide in Tokyo share prices weighed on corporate earnings forecasts for the second
half of this business year.
''Earnings forecasts for second half will be more tough,'' said Kohkichi kumagai, a manager at New Japan Securities.
Falls in December S&P futures traded on Globex contributed to the losses, traders said.
Banks had been bought earlier on hopes for early injections of public money into the sector after G7, but they pared early gains
by the close. The banking subindex fell 0.19 percent. Fuji Bank ended down five at 270.
Broader indexes fell. The Nikkei 300 was down 3.41 points or 1.72 percent at 194.55.
Japanese retail chain operator Mycal Corp fell 100 to 493, making it the third-largest percentage loser.
Traders said selling was stimulated by the company's statement that it posted a group net loss of 67 billion yen in the year to
February 1998 under U.S. accounting rules.
Volume was light, with 360 million shares traded in the first section of the Tokyo Stock Exchange and 3.98 million in the
second section. |
