Japanese shares fall in early trading

The Associated Press , Tokyo | Tue, 10/07/2008 10:03 AM | Business

Japanese shares fell sharply in early trade Tuesday, briefly sending the country's benchmark index to its lowest level since December 2003.

The Nikkei 225 stock average closed the morning session down 324.63 points, or 3.1 percent, at 10,148.46.

The index at one point had tumbled more than 5 percent to 9,916.21, dropping under the psychologically key 10,000 level for the first time in almost five years, but managed to recover some as the morning progressed.

Investors were encouraged by Wall Street's modest comeback late in the day, as well as overall sentiment that Japanese stocks had fallen too far too fast, said Toshikazu Horiuchi, equity strategist at Cosmo Securities.

"There was a sense that the market was oversold," he said.

In New York Monday, the Dow Jones industrial average closed below 10,000 for the first time since 2004, and its fall was the dominant news story in papers and TV early Tuesday in Tokyo. At its worst point, the Dow was down more than 800 points, an intraday record, before rallying during the final 90 minutes of the trading day to close down 370 points, or 3.6 percent, at 9,955.50.

Markets across Europe tumbled, with the key benchmark in Britain sinking nearly 8 percent.

The dollar continued to fall against the yen, trading near 101.90 yen versus 103 yen levels a day earlier.

Carmakers were among the morning's biggest losers. Mitsbishi Motors Corp. was down 8.9 percent, Nissan Motor Co. fell 6.7 percent, and Toyota Motor Corp. slid 5.9 percent.

The market was also awaiting the outcome of the Bank of Japan's two-day policy board meeting concluding later Tuesday.

Though it is not expected to cut interest rates this time, there is growing speculation that the central bank may soon coordinate with the U.S. Federal Reserve and the European Central bank in an emergency policy move. The Bank of Japan's overnight target call rate stands at a low 0.5 percent.

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