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Nikkei hits three-month low amid global sell-off


Caught in a global sell-off, stocks tumbled Thursday in Tokyo, with the Nikkei slipping to a three-month closing low below 18,000.

It plunged 423.98 points, or 2.33 percent, to end at the day’s low of 17,767.34, the lowest finish since Oct. 2. On Tuesday, it slipped 182.68 points.

The Topix closed down 30.90 points, or 2.08 percent, at 1,457.94, after losing 15.87 points the previous day.

Stocks opened weaker on the Tokyo Stock Exchange after European and U.S. equities met with selling on Wednesday. The Tokyo market briefly resisted further falls, but started retreating rapidly in the middle of the morning session on the back of the yen’s sharp ascent, brokers said.

The yen attracted purchases as a safe-haven currency, after China lowered the yuan’s reference rate against the dollar for the second consecutive day, fueling worries about the Chinese economy.

A plunge in Chinese stocks, which caused a halt in trading in the Shanghai market, also dampened investor sentiment, brokers said.

The benchmark Shanghai Composite Index slumped 7 percent, whereupon trading in Shanghai was suspended under an automated circuit breaker system designed to limit wild price swings.

Tokyo stocks showed some resilience in the afternoon but accelerated their downswing toward the close amid a growing risk-averse mood.

The trading halt in Shanghai, implemented only 30 minutes after the opening bell, was “unusual,” an official of a bank-affiliated securities firm said.

“The plunge seems to reflect worries about Friday’s lifting of a ban on selling of listed Chinese stocks by major shareholders,” the official said.

“As the circuit breaker was triggered, liquidity risks in the Chinese stock market were highlighted again,” said Yoshihiko Tabei, chief analyst at Naito Securities Co.

The Tokyo market also continued to be pressured by concerns over a series of emerging risks, following the cutting of diplomatic ties between Saudi Arabia and Iran, confusion in the Chinese market and North Korea’s claim of a successful hydrogen bomb test, brokers said.

“Due to the yen’s rise, it’s also difficult for investors to step up purchases of export-oriented issues, although they are undervalued,” Tabei said.

But if U.S. jobs data for December, to be released on Friday, turn out to be robust and the strength of the U.S. economy is confirmed, Tokyo stocks will probably rebound next week, an official of another securities firm said.

Falling issues overwhelmed rising ones 1,647 to 239 in the TSE’s first section, while 49 issues were unchanged.

Volume grew to 2,374 million shares from Wednesday’s 2,076 million shares.

China-related issues, such as industrial robot maker Fanuc, steel-maker JFE Holdings and air conditioner producer Daikin, came under selling due to growing uncertainty over the course of the world’s second-largest economy.

Automakers Toyota, Fuji Heavy and Honda were also downbeat, pressured by the higher yen.

A plunge in crude oil prices battered oil companies, including Inpex and Japex.

On the other hand, power firm TEPCO, drug maker Astellas and condominium builder Daito Trust Construction gained ground.

In index futures trading on the Osaka Exchange, the key March contract on the Nikkei average dived 520 points to close at 17,660.