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Back to square one: Nikkei sheds all Abe-led gains

JIJI

The Nikkei average nose-dived again Thursday after Wall Street’s slump overnight and the yen’s rise, shedding all its gains since the Bank of Japan launched powerful monetary easing in early April.

The Nikkei 225 ended down 843.94 points, or 6.35 percent, at 12,445.38, the lowest finish since April 3 — a day before the BOJ decided to implement bold easing measures. All 33 sector subindexes of the first section slumped.

On a closing basis, the key index is down 20.36 percent from its most recent peak marked May 22, driven by hopes for the economic stimulus package of Prime Minister Shinzo Abe.

The Topix plunged 52.37 points, or 4.78 percent, to close at 1,044.17, the lowest level since April 4.

Stocks were hit by massive selling from the outset of Thursday’s trading on the heels of an overnight fall in U.S. equities and the yen’s ascent against the dollar and the euro. Behind Wall Street’s dive were concerns that the U.S. Federal Reserve may scale down its easing policy at an early date.

Meanwhile, the dollar slipped below ¥95 for the first time since April 4 in Tokyo trading.

The Nikkei’s loss exceeded 870 points late in the morning session, as selling spread to a wider range of issues, including mainstay export-oriented names. The market remained under selling pressure in the afternoon, although the index trimmed losses on buybacks thanks to a temporary halt in the yen’s appreciation.

“The yen’s sharp rise not only cooled down expectations for upward revisions to corporate earnings but also raised concerns over downward revisions,” said Hiroichi Nishi at SMBC Nikko Securities Inc, adding many Japanese companies estimate the dollar to stay at around ¥95 in fiscal 2013.

Investor sentiment was also eroded by poor performances of other Asian equities.

Losers whipped winners 1,603 to 90 in the first section as volume increased to 3.264 billion shares from Wednesday’s 2.993 billion.

JGBs stay firmer

Japanese government bonds still stayed in positive territory Thursday after giving up most earlier gains amid growing wariness on the eve of a five-year note auction.

In late interdealer trading in cash JGBs, the yield on the latest 329th 10-year issue with a 0.8 percent coupon hit 0.855 percent. It was 0.870 percent Wednesday.