Tokyo Shares End Down On Strong Yen, Dubai Debt Worries
- TOKYO (Dow Jones)--The Nikkei 225 Stock Average dropped to a fresh four-month closing low Friday on continuing yen strength and worries that unfolding financial troubles in Dubai may sink U.S. stocks later in the global trading day.
- The Nikkei 225 Stock Average fell 301.72 points, or 3.2%, to 9081.52, closing just a few points off its intraday low. The dismal finish was the biggest point decline for the index since Aug. 17, and its lowest closing level since July 13.
- The Topix index of all the Tokyo Stock Exchange First Section issues lost 18.55 points, or 2.2%, to 811.01, its lowest closing level since April 1.
- Trading volume was relatively robust at over 2.25 billion shares.
- Stocks got off to a weak start after the dollar briefly fell below Y85, setting a fresh 14-year low against the yen early in the morning. As of the close of the Tokyo Stock Exchange, the U.S. currency was seen trading at 86.14 against the Japanese unit, down from 86.65 at Thursday's market close.
- Thirty-one of 33 Topix subindexes ended in negative territory, with steel, nonferrous metal, and machinery making sectors absorbing the biggest percent losses.
- A Nikkei report that mining giant BHP Billiton has asked major Japanese steelmakers to accept a change in their pricing mechanism for coking coal to one linked to market prices hurt the sector. Nippon Steel lost 4.0% to Y310 and JFE Holdings sank 5.8% to Y2,765 on concerns that the new method could mean higher procurement costs.
- Stronger yen concerns hit major exporters hard, sending Honda Motor shares down 3.8% to Y2,660, and Sony shares down 4.4% to Y2,265. Canon fell 2.7% to Y3,200.
- "The yen strengthening trend will continue," said Nikko Cordial senior strategist Tsuyoshi Kawata. "Speculative traders are assuming that the government won't take any immediate action."
- The Nikkei sharply extended its losses late in the session on a decline in Globex U.S. stock futures. Wall Street trading resumes for a shorted session after yesterday's Thanksgiving Day holiday.
- "After European stocks fell on Dubai debt exposure concerns, hedge selling is kicking in on worries that Wall Street may face a similar selloff," said Daiwa Securities SMBC market analyst Yumi Nishimura. Dubai World, the city state's largest corporate entity, asked creditors Wednesday for a six-month moratorium on debt repayments.
- General contractors and other development project-related stocks were some of the biggest victims of Dubai-related speculative selling. The Nikkei newspaper reported that large builders would be among the first to be hit by the Dubai debt crisis because of major contracts tendered by Nakheel, Dubai World's property development unit. Taisei sank 7.1% to Y145, while Obayashi tumbled 8.7% to Y284.
- December Nikkei 225 futures ended down 320 points, or 3.4%, at 9070 on the Osaka Securities Exchange.
- For the holiday-shortened week, the Nikkei dropped 4.4%, and is off 9.5% for the month with one trading day to go. Year-to-date, it is still up 2.5%.
By Juro Osawa, Dow Jones Newswires; 813-6895-7569; firstname.lastname@example.org