TOKYO: Japan's Nikkei stock average shed 2.2 percent on Wednesday, Sept 8 as the yen's advance to a new 15-year high extinguished an upbeat mood gained from last week's better-than-expected economic indicators.
A revival of concerns over European banks and uncertainty over the political situation at home added to the dour mood.
The Nikkei, one of the worst performing major world stock markets this year, had risen as much as 5 percent this month but was on track to halve those gains on Wednesday as it headed back towards a 16-month low marked last week.
"The Nikkei's drop towards 9,000 is in short due to the renewal of European bank concerns, a stronger yen and prospects of a worsening in the domestic political situation," said Masayoshi Okamoto, head of dealing at Jujiya Securities.
"The dollar falling below 84 yen has completely neutralised any positive impetus from the jump in machinery orders. Even if the market was to get used to the yen at this level, it still has to worry about the potential fallout from politics."
Prime Minister Naoto Kan is seeking to fend off a challenge to his leadership of the ruling party from veteran powerbroker Ichiro Ozawa, with the party vote set for Sept. 14.
Markets are keeping a close eye on developments as it could spell a potential shift in how the country copes with a strong yen, weak economy and huge public debt.
The benchmark Nikkei fell 197.5 points to 9,028.50, edging closer to a 16-month closing low of 8,824.06 hit last Tuesday. The broader Topix lost 1.8 percent to 819.57.
The Nikkei this week had risen above its 25-day moving average for the first time in nearly a month. The average, considered a proxy for a one-month moving average and closely watched in Japan, now lies around 9,194.
Shares of blue chip exporters lost ground. Investors fret about a stronger yen as it eats into exporter profits.
Sony Corp fell 1.9 percent to 2,466 yen and Canon Inc shed 2 percent to 3,515 yen. Honda Motor Co skidded 2.3 percent to 2,750 yen.
Many Japanese companies have assumed a dollar/yen rate of 90 yen and euro/yen rates of 110-115 yen in the year to March 2011.
The dollar traded at 83.80 yen after reaching a new 15-year low of 83.51 on trading platform EBS on Tuesday.
Japan's core machinery orders rose a more-than-expected 8.8 percent in July from the previous month, bigger than a median estimate for a 1.8 percent increase
A revival of concerns over European banks and uncertainty over the political situation at home added to the dour mood.
The Nikkei, one of the worst performing major world stock markets this year, had risen as much as 5 percent this month but was on track to halve those gains on Wednesday as it headed back towards a 16-month low marked last week.
"The Nikkei's drop towards 9,000 is in short due to the renewal of European bank concerns, a stronger yen and prospects of a worsening in the domestic political situation," said Masayoshi Okamoto, head of dealing at Jujiya Securities.
"The dollar falling below 84 yen has completely neutralised any positive impetus from the jump in machinery orders. Even if the market was to get used to the yen at this level, it still has to worry about the potential fallout from politics."
Prime Minister Naoto Kan is seeking to fend off a challenge to his leadership of the ruling party from veteran powerbroker Ichiro Ozawa, with the party vote set for Sept. 14.
Markets are keeping a close eye on developments as it could spell a potential shift in how the country copes with a strong yen, weak economy and huge public debt.
The benchmark Nikkei fell 197.5 points to 9,028.50, edging closer to a 16-month closing low of 8,824.06 hit last Tuesday. The broader Topix lost 1.8 percent to 819.57.
The Nikkei this week had risen above its 25-day moving average for the first time in nearly a month. The average, considered a proxy for a one-month moving average and closely watched in Japan, now lies around 9,194.
Shares of blue chip exporters lost ground. Investors fret about a stronger yen as it eats into exporter profits.
Sony Corp fell 1.9 percent to 2,466 yen and Canon Inc shed 2 percent to 3,515 yen. Honda Motor Co skidded 2.3 percent to 2,750 yen.
Many Japanese companies have assumed a dollar/yen rate of 90 yen and euro/yen rates of 110-115 yen in the year to March 2011.
The dollar traded at 83.80 yen after reaching a new 15-year low of 83.51 on trading platform EBS on Tuesday.
Japan's core machinery orders rose a more-than-expected 8.8 percent in July from the previous month, bigger than a median estimate for a 1.8 percent increase
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