The FINANCIAL — Tokyo stocks fell sharply Monday morning with investors securing profits after a two-day rally that lifted the key Nikkei index to a 15-month closing high Friday, while concerns over the U.S. banking sector and Japanese political uncertainty were weighing on investor sentiment.
The 225-issue Nikkei Stock Average dropped 201.07 points, or 1.83 percent, from Friday to 10,781.03. The broader Topix index of all First Section issues on the Tokyo Stock Exchange lost 11.83 points, or 1.22 percent, to 954.57.
Stocks declined across the board, led by air transport, securities, and oil and coal product issues.
"After hitting a 15-month closing high on Friday, the Nikkei fell at the outset of trading and extended losses as investors unloaded a broad range of shares for quick profits, brokers said," Nikkei informs.
Yutaka Miura, a senior technical analyst at Mizuho Securities Co., said, ''The Tokyo market is also bearing the brunt of a fall in U.S. stocks'' and added that ''uncertainty about the outlook for U.S. stocks is a big factor'' in the fall in Tokyo shares.
On Friday, Wall Street declined due partly to disappointment over significant credit losses sustained by JPMorgan Chase & Co. in the fourth quarter, which subsequently dragged down Japanese banking shares like Mitsubishi UFJ Financial Group, which lost 5 yen, or nearly 1 percent, to 501 yen.
Other financial issues were likewise weak, with Nomura Holdings dropping 22 yen, or nearly 3 percent, to 753 yen.
Investor sentiment also weakened due to concerns that, as the Diet's ordinary session begins Monday, funds scandals involving Prime Minister Yukio Hatoyama and his Democratic Party of Japan's No. 2, Ichiro Ozawa, may create rough sailing for the passage of budgets and other bills, according to brokers.
Miura said uncertainty in the Japanese political situation is a factor in making investors cautious and limiting shares' upward momentum.
Shares of volume leader Japan Airlines fell 1 yen, or over 14 percent, to 6 yen, trading in a limited range amid continued speculative trading. A government-backed body in charge of turning around JAL operations is expected to announce JAL's court-led restructuring measures Tuesday.
Bright spots included Tokyo Steel, which rose 2 yen, or 0.19 percent, to 1,072 yen, after the Nikkei business daily reported that the steelmaker will begin exporting its products after a five-month suspension.
Among the megabanks, value leader Sumitomo Mitsui Financial Group gained 45 yen, or over 1 percent, to 3,095 yen, extending gains from the past two trading days supported by lingering optimism about the global economic outlook, brokers said.
On the First Section, declining issues outnumbered advancing ones 1,138 to 415, with 119 others ending the morning unchanged.
Trading volume on the main section came to 1,175.78 million shares, down from Friday morning's 1,599.57 million.
The TSE's Second Section index fell 5.96 points, or 0.28 percent, to 2,100.56 on a volume of 25.24 million shares. On the Osaka Securities Exchange, the near-term March Nikkei 225 index futures contract was down 180 points to 10,790.
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