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Nikkei finishes below 14,000 as losing streak continues

JIJI

The Nikkei 225 average suffered a fourth straight session of losses Monday, ending below 14,000 for the first time in about a month under pressure from the yen’s rise against the dollar amid a U.S. political deadlock.

The main market benchmark lost 170.99 points, or 1.22 percent, to end the day at 13,853.32, the first close below the 14,000 mark since Sept. 6.

The Topix shed 16.24 points, or 1.40 percent, to close at 1,147.58, extending its losing streak to a seventh day.

The TSE opened the week with moderate gains following a Wall Street rebound Friday on hopes that a deal could be reached in the U.S. political impasse.

But stocks quickly lost steam to plunge into negative territory as the yen gained strength against the dollar amid the ongoing U.S. deadlock, prompting futures-led selling in the stock market, brokers said. The dollar fell to around ¥97 in Tokyo trading Monday.

While there were no major Japan-specific factors that should weigh on the Tokyo market, investors were growing cautious because no progress has been made so far regarding the U.S. government shutdown as well as talks to raise its borrowing limit, brokers said.

“Market participants are concerned that political stagnation in the United States could lead to a ‘risk off’ mood in global (financial) markets,” Hiroichi Nishi, equity general manager at SMBC Nikko Securities Inc. said. “But they largely expect that a U.S. government default can be averted at the last minute.”

While hopes are still high for robust half-year earnings of Japanese companies due out from later this month, “the timing was bad” for Tokyo stocks, said Ryuta Otsuka, a strategist in the investment information department of Toyo Securities Co. Ahead of the release of earnings reports, it is difficult for investors to trade actively at the moment, he said.

Falling issues far outnumbered rising ones 1,449 to 249 in the first section, while 54 issues were unchanged.

By sector, the biggest percentage loser was utilities, with all of the country’s major 10 power firms suffering losses. Tokyo Electric Power gave up a whopping 7.58 percent.

Hit by a strong yen, automakers were mostly downbeat, with Fuji Heavy Industries, Mazda and Mitsubishi Motors losing more than 2 percent.

By contrast, Softbank rose 2.89 percent on news that the mobile carrier posted a net increase in subscribers for the 21st month in September. NTT DoCoMo, which began selling Apple Inc’s popular iPhone last month, lost ground.

JGB futures gain ground

Japanese government bond futures advanced Monday on the back of the U.S. fiscal deadlock.

The lead December contract on 10-year JGBs finished up 0.07 point from Friday at 144.43. Volume fell to 15,989 contracts from 22,081.

In late interdealer trading in cash JGBs, the yield on the latest 330th 10-year issue with a 0.8 percent coupon stood at 0.645 percent, down from 0.650 percent late Friday.

The key futures contract traded on a firm note from the outset as investors stepped up flight-to-quality purchases due to a lack of progress in stalled U.S. budget and debt ceiling negotiations, traders said.