TOKYO, Oct. 11 (Xinhua) -- Japan's benchmark Nikkei stock index closed sharply lower Tuesday as better-than-expected U.S. employment data reinforced the view the U.S. Federal Reserve will continue with aggressive rate hikes to combat inflation.

The 225-issue Nikkei Stock Average dropped 714.86 points, or 2.64 percent, from Friday to close the day at 26,401.25.

The broader Topix index, meanwhile, lost 35.56 points, or 1.86 percent, to finish at 1,871.24.

Markets here were closed on Monday for a national holiday.

The Japanese yen dropped as low as 145.86 to the U.S. dollar, marking its lowest level since 145.90 on Sept. 22, when Japanese financial authorities intervened in the currency market for the first time since 1998 to redress the yen's sharp decline.

The U.S. dollar stayed firm in the upper 145 yen zone during trading hours, dealers here said, with traders opting not to buy the U.S. dollar above this mark, following Japan's Finance Minister Shunichi Suzuki warning that "appropriate" steps would be taken if the yen's volatility increased.

"Market players refrained from buying the U.S. unit above that level after the Japanese finance minister warned that the government will take 'appropriate' steps if the yen's volatility increases," Takuya Kanda, senior researcher at the Gaitame.com Research Institute, was quoted as saying.

U.S. unemployment data released Friday showed 263,000 jobs were added in September, marking the smallest monthly increase since April last year, market strategists here highlighted.

They added that the latest figure followed a 315,000 gain booked in August, with the current unemployment rate dropping to an unexpected 3.5 percent.

The figures, they said, raised the prospect the Fed would continue with its aggressive monetary tightening policy to tame inflation.

"Tokyo stocks had rebounded recently due to views that the Fed will start loosening its grips on monetary tightening, but the robust U.S. employment data completely denied such views," Toshikazu Horiuchi, equity strategist at IwaiCosmo Securities Co., was quoted as saying.

By the close of play, farm and fishery, precision instrument and electric appliance issues comprised those that declined the most.

The Philadelphia semiconductor index dropping 3.5 percent overnight pressured chip-oriented issues here, with Tokyo Electron slumping 5.5 percent, while chipmaker Renesas Electronics fell 5.7 percent.

Industrial robot maker Fanuc Corp. lost 3.9 percent, while electric motor maker Nidec Corp. was the Nikkei's biggest loser, plummeting 9.3 percent. Yaskawa Electric, meanwhile, closed 6 percent lower.

Travel and retail issues found favor, with East Japan Railway Co. adding 2.3 percent, while Japan Airlines rose 2.7 percent. ANA Holdings, meanwhile, climbed 1.9 percent by the close.

On the Prime Market on Tuesday, 1,296.46 million shares changed hands, rising from Friday's volume of 1,111.96 million shares, and falling issues outpaced rising ones by 1,594 to 211, while 31 ended the day unchanged.

The turnover on the first trading day of the week came to 3,159.44 billion yen (21.69 billion U.S. dollars). Enditem

Related

Go to Forum >>0 Comment(s)