Nikkei in Japan Drops 1.7%

Nigel Thomas
16 Jun, 2011
New York City

Stocks in Japan fell tracking losses in New York and European markets. Greek worries and uneven economic recovery in the U.S. dragged market indexes. Greek troubles intensified as riots broke out in Athens and European leaders struggle to decide the share of losses if Greece defaults on loans.

[R]5:00 PM Tokyo – Stocks in Japan fell tracking losses in New York and European markets. Greek worries and uneven economic recovery in the U.S. dragged market indexes. Greek troubles intensified as riots broke out in Athens and European leaders struggle to decide the share of losses in the event of Greek bond restructuring.[/R]

Japanese stocks closed sharply lower following overnight losses in New York on rising tensions in the euro-zone and weak economic data in the U.S.

Markets in Japan, Hong Kong, Shanghai and Australia lost more than 1.3% and resources prices declined sharply in Asian trading.

Greece descended into chaos as prime minister offered to resign to unite the nation and students and labor unions rioted on the streets of Athens. Prime Minister George Papandreou in a televised address last night to the nation said he will form a new government and call a vote of confidence in parliament.

Greek unemployment also surged in the first quarter to 16% from 12% in the quarter a year ago and unemployment among youth soared to 30%.

The latest market decline was started after euro-zone leaders and the European Central Bank failed to agree on the second Greek bailout terms yesterday.

The ECB is expected to take significant losses if Greek bonds are restructured. The European finance ministers could not agree on share of losses for private sector banks if Greek bonds are restructured.

Stocks in Tokyo opened lower and quickly dropped to the low in the early trading and accelerated the decline in the late afternoon.

The Nikkei 225 Stock Average dropped 1.7% to 9,411.28 and the broader Topix index fell 1.5% to 812.41.

Tokyo trading volume increased to 1.79 billion shares from the 1.99 billion in the previous session.

The yen strengthened to 80.18 from 80.50 against one dollar and rose to 113.9 from 115.40 against one euro.

Stock Movers

Stocks linked to Europe declined in trading.

Toyota Motor fell 1.7% to 3,195 yen, Honda Motor Co declined 1.3% to 2,953 yen and Nissan Motor Co Ltd eased 2% to 794 yen.

Canon Inc fell 1.8% to 3,740 yen and Advantest Corp dropped 2.2% to 1,411 yen. Nikon Corp declined 2.3% to 1,915 yen and Sony Corp dropped 1.7% to 2,001 yen.

Resources linked stocks declined after crude oil dropped 4.5% to $96.50 a barrel in New York trading.

Inpex Corp dropped 4% to 565,000 yen and Mitsui & Company dropped 3.5% to 1,283 yen and Mitsubishi Corp fell 2.8% to 1,936 yen.

Steelmakers rose on positive comments from a broker. JFE Holdings increased 1.8% to 2,007 yen and Nippon Steel increased 0.8% to 239 yen.

Real estate developers declined after fewer than expected condominiums were placed on the market by the companies in Tokyo.

Mitsui Fudosan fell 3.6% to 1,297 yen and Sumitomo Realty & Development Co fell 2.4% to 1,638 yen. Mitsubishi Estate Co declined 2.6% to 1,330 yen.