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Nikkei tumbles on flurry of futures-led selling

JIJI

The Nikkei 225 average tumbled more than 7 percent in hectic trading Thursday — its biggest daily percentage loss in more than two years — due to a flurry of futures-led selling.

The Nikkei lost 1,143.28 points, or 7.32 percent, to finish at 14,483.98. It was the largest single-day percentage loss since a 10.55 percent drop on March 15, 2011, and the biggest point loss since shedding 1,426 points on April 17, 2000. The Topix dropped 87.69 points, or 6.87 percent, to end at 1,188.34.

Trading was highly active, with volume in the first section swelling to an all-time high of 7.655 billion shares. The previous record of 6.449 billion was set April 5.

The market got off to a strong start as mainstay export-oriented issues attracted buying thanks to the yen’s fall past 103 to the dollar after U.S. Federal Reserve Chairman Ben Bernanke hinted in congressional testimony Wednesday that the Fed could scale down its quantitative monetary easing later this year.

The Nikkei briefly rose to 15,942.60 in the morning, the highest intraday level since Dec. 12, 2007. But the market came under heavy selling pressure after the release of weaker than expected Chinese economic data in midmorning. The Nikkei accelerated its dive in the afternoon, led by a tumble in index futures.

Yoshihiko Tabei, chief analyst at Kazaka Securities Co., noted that a sense of caution about the recent rapid stock rally had grown among investors as there had been no major correction since mid-November.

“The Nikkei average extended losses once the market mood (in which) buying prompted more buying turned into one in which selling triggered further selling,” Tabei said, adding that short-term investment money flowed out.

Tabei said a big correction like Thursday’s can’t be explained. Still, he said, “as long as the Nikkei average stays above its 25-day moving average, there is no need to worry.” The moving average stood at 14,247 on Thursday.

Losers topped winners 1,691 to 17 in the first section.

10-year yield drops

The key 10-year Japanese government bond yield dropped Thursday on tumbling stock prices after briefly hitting a 14-month high of 1.0 percent.

The yield on the latest 328th 10-year JGB issue with a 0.6 percent coupon touched 1.000 percent at one point in morning interdealer trading, a level unseen since April 5, 2012, before falling to 0.835 percent by late trading.