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Nikkei retreats below 19,500, tracking Wall St. lower

JIJI

Stocks turned lower on the Tokyo Stock Exchange on Tuesday, weighed down by an overnight plunge in crude oil prices, with the Nikkei average closing below 19,500.

The Nikkei shed 205.55 points, or 1.04 percent, to end at 19,492.60, the lowest closing level in about three weeks. On Monday, it climbed 193.67 points.

The Topix finished down 16.48 points, or 1.04 percent, at 1,568.73, after rising 11.19 points the previous day.

Tokyo stocks briefly attracted purchases in the early morning thanks to an upward revision to gross domestic product figures for July-September, reported just before the opening bell, but soon came under selling pressure. Stocks extended losses toward the morning close and moved weaker for the rest of the day.

Banks, automakers and other large-cap issues, as well as oil companies, met with selling following an overnight drop in U.S. equities. Investor sentiment was dampened by slumping crude oil prices, brokers said.

The benchmark January contract on West Texas Intermediate crude oil futures fell to $37.65 per barrel, the lowest level in six years and 10 months for a key contract, on the New York Mercantile Exchange Monday. The sell-offs reflected growing worries about an oil supply glut after the Organization of the Petroleum Exporting Counties failed to reach an agreement to cut its oil output target late last week, brokers said.

Although Japan’s seasonally adjusted real GDP in July-September grew an annualized 1.0 percent quarter on quarter, in a turnaround from the 0.8 percent contraction shown in a preliminary report last month, investor reaction was “less than expected,” an official of a bank-affiliated securities firm said.

The data reflected a sharp upward revision to capital spending, a welcome sign for the stock market. But some brokers said that as the growth turned out to be very strong, expectations for economic stimulus measures by the Japanese government retreated somewhat.

“Weaker Asian stock prices also helped push down the Tokyo market,” said Hiroaki Hiwada, strategist at Toyo Securities Co.

The Nikkei showed some resilience around its 200-day moving average, which stood at 19,471.81 as of Monday. Still, Tokyo stocks are likely to be affected by possible heavy buying and selling ahead of Friday’s special quotation fixing to settle December index futures and options contracts, Hiwada said.

Falling issues far outnumbered rising ones 1,430 to 377 in the TSE’s first section, while 116 issues were unchanged.

Volume grew to 1,921 million shares from Monday’s 1,657 million shares.

Automakers Toyota, Mazda and Fuji Heavy lost ground, along with electronics manufacturer Sony.

Oil companies, such as Inpex, JX Holdings, Idemitsu Kosan, as well as engineering firms Modec and JGC, suffered sharp drops.

China-related issues, including industrial robot producer Fanuc and construction machinery maker Komatsu, were also on the minus side after China reported Tuesday that the country’s exports in November fell 6.8 percent from a year before, down for the fifth consecutive month.

By contrast, airlines JAL and ANA, fishery product maker Nippon Suisan Kaisha and railway operator JR Tokai were buoyant.

In index futures trading on the Osaka Exchange, the key December contract on the Nikkei closed down 260 points at 19,490.