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20% Fall In The Nikkie

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Tokyo shares slide on US rates concerns

By David Turner and Yuko Hara in Tokyo

Published: June 13 2006 04:59 | Last updated: June 13 2006 08:02

The Nikkei closed 4.1 per cent lower at 14,218.60, bringing its total fall to about 20 per cent since this year’s intraday high on April 7. The benchmark average reached its lowest close since November. The Topix dropped 3.5 per cent to 1,458.30.

Analysts blamed a fresh overnight drop in the US stock market, caused by investor worries that higher inflation could prompt a rise in interest rates.

The electrical machinery sector, for which the US is an important market, plunged 4.1 per cent. Transport equipment dropped 4 per cent.

Sharp lost 7.1 per cent to Y1,613 on competition fears. Investors were responding to the news that Korea’s LG Philips LCD, the world’s top maker of LCD panels, had cut its earnings forecast because of lower sales and price falls for flat screen panels.

NEC, the industrial electronics conglomerate, was down 4.7 per cent to Y588 after Morgan Stanley cut its rating to “underweight” from “overweight”. Morgan Stanley dismissed its earlier suggestion that NEC’s earnings might bounce back quickly. The brokerage also downgraded Japan’s industrial electronics sector as a whole to “cautious” from “inline”.

Chip-related stocks declined after falls among their US counterparts. Advantest was down 5.5 per cent to Y10,320, with Kyocera plunging 5.6 per cent to Y8,300.

Matsushita Electric Industrial, the world’s biggest maker of consumer electronics, was down 5.5 per cent to Y2,215. Toshiba, the electronics giant, lost 3.7 per cent to Y671. Sony, the consumer electronics and entertainment conglomerate, fell 3.3 per cent to Y4,770.

Among carmakers, Toyota, Japan’s largest, dropped 4.2 per cent to Y5,530. Honda dived 4.1 per cent to Y6,740.

Fears about export prospects also hit industrial machinery makers. Komatsu, the construction machinery maker, plummeted 5.2 per cent to Y1,935.

Most domestic sectors also dropped on global stock market concerns.

The real estate sector, whose share prices have been highly volatile this year on fears of high valuations after last year’s spectacular rally, declined 4.4 per cent. Mitsui Fudosan, Japan’s biggest property company, dropped 5.6 per cent to Y2,175.

Commodity stocks were also hit by the general mood of pessimism about global demand. Sumitomo Metal Mining dropped 5.9 per cent to Y1,243. Inpex, the upstream oil and gas company, was down 4.1 per cent to Y850,000.

Mothers, a small and mid-cap index dominated by retail investors, fell 2.4 per cent to 1,344.05, resuming its downward trend. But amid the market carnage, its losses seemed relatively restrained – suggesting Mothers is beginning to find the bottom after this year’s steep slide.

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  • 301 Brexit, House prices and Summer 2020

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