UPDATE1: Tokyo stocks fall sharply in morning on weak U.S. stocks, oil prices
Tokyo
stocks dropped sharply Tuesday morning, with the
Nikkei stock index briefly down over 2 percent, as a Wall Street plunge overnight following a slide in oil prices dampened investors' sentiment.
The 225-issue Nikkei Stock Average shed 310.94 points, or 1.82 percent, from Monday to end the morning at 16,799.97. The broader Topix index of all First Section issues on the Tokyo Stock Exchange was down 22.66 points, or 1.63 percent, to 1,369.97.
Decliners were led by mining, banks, and iron and steel.
Tokyo
stocks opened lower, with the
Nikkei stock index briefly shedding more than 400 points after extending gains for the first time this year the previous day, as the rally in
U.S.
stocks from late last week evaporated after oil prices slumped overnight.
"The fresh downturn in oil prices has shaken investor confidence and has triggered weakness in
Tokyo
stocks,"
Maki Sawada of
Nomura Securities Co.'s investment research department, said.
After staging a two-day rally, crude oil futures fell to $30.34 per barrel in
New York
on Monday after briefly slipping below
$30.
Sluggish Chinese stocks opening lower Tuesday also weighed on
Tokyo
equities, further fueling fears about the strength of the world's second largest economy, analysts said.
Sawada, however, said losses in
Tokyo
equities were limited as investors are turning their attention to crucial two-day policy meetings of the
U.S.
Federal Reserve starting later in the day and the
Bank of Japan beginning on Thursday.
"Investors are expecting the central banks to provide further policy support, so depending on the outcomes of the two meetings, volatility in the Japanese stock market could continue," Sawada said.
The dollar's strength, trading at the lower 118 yen level, also underpinned
Tokyo
stocks, Sawada said. A weaker yen boosts Japanese companies' overseas earnings when repatriated.
On the First Section, declining issues trounced advancing issues 1,571 to 301, while 62 ended the morning unchanged.
The fall in oil prices dragged down mining and resource-related issues.
Inpex plunged 43.90 yen, or 4.3 percent, to 978.10 yen while Cosmo Energy fell 46 yen, or 3.6 percent, to 1,246 yen and trading house Sumitomo lost 26.50 yen, or 2.3 percent, to 1,110.50 yen.
==Kyodo
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