Tokyo shares continue decline on global slump

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The Japanese stock market was pushed down on Tuesday by a combination of weakness in both export-focused and domestic sectors. The Nikkei 225 closed 1.6 per cent lower at 15,599.20. The Topix was 2.3 per cent lower at Y1,579.26, hit in particular by falls in banking stocks, which have a high weighting in the index.

Japanese shares continued to suffer from the global flight from equities, which pushed virtually every sector lower.

Some stocks with a particularly high exposure to the US market were badly hit, given fears about the US economy.

The transport equipment sector, which is heavily reliant on the US for sales, fell a touch faster than the Topix. Toyota, Japan’s biggest carmaker, was down 1.8 per cent to Y5,950.

Tech stocks fell in response to a slide in their US counterparts. Tokyo Electron plunged 4.2 per cent to Y8,120.

The market was also pushed lower by further falls in commodity stocks, which were forced down by lower commodity prices. Sumitomo Metal Mining slid 3.3 per cent to Y1,422. Inpex, the upstream oil company, dropped another 3.7 per cent to Y912,000.

But in a sign of true bearishness, the falls in commodity prices failed to push up companies that should benefit from lower materials prices. Shippers, which are oil-intensive users, failed to benefit from lower oil prices, falling 2.7 per cent.

Mitsubishi UFJ, the world’s biggest bank by assets, plunged 6.1 per cent to Y1,530,000 after forecasting a steep fall in earnings in 2006/07 from record 2005/06 profits. Mizuho, its largest rival in Japan, was down 4.8 per cent to Y895,000 after UBS said its net operating profit target for 2006/07 may be too ambitious. The sector as a whole fell 4.3 per cent.

Mitsubishi Electric declined 4 per cent to Y909 after saying the US Justice department was looking at its dynamic random access memory operations.

Real estate, which has been a highly volatile sector this year on fears about overvaluation following last year’s spectacular rise, was down sharply. Mitsui Fudosan, Japan’s largest property company, fell 2.1 per cent to Y2,350.

The securities sector fell 2.7 per cent – following the market’s general direction but in an exaggerated manner, as usual. Nomura, Japan’s biggest securities house, was down 2.9 per cent to Y2,200.

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