Nikkei down on economy woes

Nikkei fell 1.2 per cent on Wednesday,at one point touching a three-month intraday low.

Written by Reuters | Tokyo | Published: February 18, 2009 9:34:38 am

Japan’s Nikkei stock average fell 1.2 per cent on Wednesday,at one point touching a three-month intraday low,as worries about a deepening US recession and European bank woes hit financials and property firms.

But falls were braked by Toyota Motor Corp,which rose more than 2 per cent after the Nikkei business daily reported it plans to boost production in Japan by about 30 per cent in May compared with the average output of the three preceding months as inventories fall.

Obayashi Corp and other construction firms gained on hopes that government efforts to shore up the ailing economy may lead to more public works projects.

But sentiment was fragile after the Dow Jones index .DJI and S&P 500 .SPX on Tuesday fell to their lowest levels since November 20,despite US President Barack Obama signing into law a $787 billion stimulus package,as weak manufacturing data showed the recession was deepening.

“What’s happening shouldn’t necessarily be affecting the market that much,since the European bank issue isn’t all that new and the US manufacturing data shouldn’t usually have that much impact,” said Hideyuki Ishiguro,a supervisor in the investment strategy department of Okasan Securities.

“But ever since the market was disappointed by the US bank plan,which seemed just to be putting things off,sentiment has become weak and the market has become sensitive to bad news.”

The benchmark Nikkei .N225 shed 90.86 points to 7,554.65 after earlier falling to 7,479.18,its lowest intraday level since November 21. On Tuesday it booked its lowest close since October 28.

The broader Topix fell 0.9 per cent to 749.94.

US financial stocks sank to 14-year lows after Moody’s Investors Service said banks could be hit by the recession in Eastern Europe.

Factory activity in New York State fell to a record low in February,the New York Federal Reserve said on Tuesday,suggesting that January’s minor halt in the worsening of factory data was an aberration rather than a signal of recovery that would bring about a rebound in the economy.

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