Stocks erased early gains to end lower Wednesday amid nervous trading due to lingering worries over the Chinese economy.
The Nikkei 225 average closed down 135.33 points at 12,834.01. On Tuesday, the key market gauge lost 93.44 points.
The Topix fell 9.38 points to end at 1,069.28 after dropping 10.98 points Tuesday.
Both indexes extended their losing streaks to a third day.
The market got off to a solid start on the heels of overnight gains in European and U.S. equities thanks to a series of better than expected U.S. economic indicators.
The Nikkei rose 220 points at one point in early trading, also aided by a drop in the yen against other major currencies, but it fell back to end the morning session in negative territory as the Shanghai stock market opened lower.
After a brief rise above the previous day’s closing in the afternoon, the index fell back again, led by an accelerated decline in index futures that followed a rebound by the yen.
The fall in the Shanghai market came in spite of an announcement Tuesday by the People’s Bank of China that it had provided liquidity to some banks.
“Market players remain jittery because Shanghai stocks continued losing ground on Wednesday,” said Masashi Oguchi of Mito Securities Co.’s investment information department.
In addition, a tumble by the TSE’s Mothers market for startup companies dampened individual investors’ appetite for small stocks, helping reduce trading volume and value on the first section, Oguchi said. On Wednesday, the Mothers index ended down 81.54 points, or 11.62 percent, at 620.46.
“A lack of information on the real state of the Chinese financial sector is likely to make market players risk-averse and prompt buying of the yen, thereby continuing to pressure Tokyo stocks,” Oguchi added.
Declining issues overwhelmed rising ones 1,394 to 247 on the first section, while 48 issues were unchanged. Volume fell to 2.487 billion shares from Tuesday’s 2.712 billion.
JGB futures edge up
Japanese government bond futures inched higher Wednesday in directionless trading, with investors keeping a close eye on stock market moves.
The lead September contract on 10-year JGBs closed up 0.01 point at 142.25. Volume fell to 20,592 contracts from Tuesday’s 28,523.