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Tokyo stocks close down 1.74%

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(Globalpost/GlobalPost)

Tokyo stocks fell 1.74 percent Thursday after US Federal Reserve chairman Ben Bernanke said the bank could start reeling in its massive stimulus later this year, while weak Chinese manufacturing data also hit sentiment.

The benchmark Nikkei 225 index closed down 230.64 points at 13,014.58, while the Topix index of all first-section shares was 1.33 percent, or 14.76 points, lower at 1,091.81.

The Fed said Wednesday it would keep in place its $85-billion-a-month bond-buying programme as unemployment remains high and growth in the world's top economy was being held back by government spending cuts.

But in a news conference Bernanke said the Fed's policy committee "currently anticipates that it would be appropriate to moderate the monthly pace of purchases later this year" if the economic outlook continues to improve.

The Fed also upgraded its assessment of the economic recovery, saying unemployment may fall to 6.5 percent by the end of 2014 -- one condition previously set to justify rolling back stimulus programme.

Fed easing and similar moves from other central banks have been credited with helping prop up global equity markets in the face of an unsteady world economy.

"The Fed's result was not out of line with expectations," SMBC Nikko Securities general manager of equities Hiroichi Nishi told Dow Jones Newswires.

"Some transparency as to the possible end of US easing is the biggest takeaway. Players can now factor this into investment strategies. Wall Street's fall will act as a short-term negative against the larger beneficial effect of a weaker yen."

The Dow Jones Industrial Average sank 1.35 percent to 15,112.19 in New York.

On currency markets Thursday, the dollar was at 97.17 yen, up from 96.39 yen in New York late Wednesday.

Selling pressure grew further after HSBC said China's manufacturing activity shrank again in June, hitting a nine-month low and adding to concerns about the strength of the Asian economic giant.

In share dealing, Sony slipped 0.09 percent to 2,013 yen as it held its annual shareholders meeting, where chief Kazuo Hirai addressed a hedge fund investor's proposal to spin off part of the firm's entertainment division.

Hirai told the meeting that is was reviewing the idea but would not make a quick decision on the proposed share sale.

GS Yuasa, the battery supplier for Boeing's troubled Dreamliner, was up 5.88 percent at 431 yen after announcing a tie-up with German technology giant Bosch to develop lithium-ion batteries.

Sharp fell 2.58 percent to 415 yen while Panasonic lost 2.80 percent to 728 yen.

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http://www.globalpost.com/dispatch/news/afp/130620/tokyo-stocks-close-down-174-0