/

Rampant futures-led selling sends Nikkei lower

JIJI

Stocks lost further ground Thursday on massive futures-led selling, sending the Nikkei 225 average to a six-week closing low.

The Nikkei plunged 219.38 points to 13,605.56, its lowest finish since June 27, a day after tumbling 576.12 points. The Topix lost 15.67 points to end at 1,139.59 after falling 38.40 points Wednesday.

The key indexes briefly popped up into plus territory on a slight retreat in the yen’s value. In the afternoon, however, they came under heavy pressure from speculative selling to adjust positions before Friday’s special quotation fixing to settle August options contracts.

The outcome of the Bank of Japan’s Policy Board meeting that ended Thursday had little impact on the TSE as the BOJ kept its monetary policy unchanged, brokers said.

The Nikkei briefly soared more than 200 points thanks to aggressive buybacks after Wednesday’s tumble, but the gains quickly disappeared.

In thin summer trading, “stock prices can easily be swayed by moves in index futures,” said Masashi Oguchi of Mito Securities Co.’s investment information department.

Trading is expected to remain thin Friday and next week as more investors are likely to take summer vacation, brokers said.

“In a medium- to long-term perspective, however, there is no change in the trend of higher stock prices and a weaker yen. The market environment remains favorable for investors,” Oguchi said.

Falling issues far exceeded rising ones 1,341 to 300 on the first section, while 112 issues were unchanged. Volume decreased to 2.333 billion shares from Wednesday’s 2.422 billion.

Tire-makers Sumitomo Rubber and Brigestone came under selling pressure.

Exporters, including Toyota, Sony and Hitachi, slid.

Banking groups Sumitomo Mitsui and Mitsubishi UFJ lost ground as did brokerage Nomura and insurer Tokio Marine.

On the other hand, Shimizu surged 3.61 percent after the general contractor announced strong earnings for April-June on Thursday, brokers said.

JGBs drift lower

Japanese government bonds inched down Thursday, recouping most of earlier losses as stocks lost steam.

The lead September futures contract on 10-year JGBs closed down 0.01 point from Wednesday at 144.01. Turnover increased to 22,403 contracts from 19,797.