Japanese markets drop amid fears

Posted by Yuka as Japan

TOKYO — Fears over the global financial crisis briefly drove Japan’s Nikkei stock average down more than five per cent Tuesday to a five-year low of less than 10,000 before bargain hunting emerged to pare losses to 3.1 per cent.

The benchmark Nikkei .N225 shed 324.63 points to 10,148.46 by midsession after earlier falling as far as 9,916, its lowest since December 2003.
The broader Topix .TOPX was down 2.7 per cent to 972.13 after earlier falling more than five per cent.

Japanese Prime Minister Taro Aso said on Tuesday that Asia’s largest economy was sound but warned that the global financial crisis threatened to sap demand for Japanese exports.
“The financial system in Japan itself is sound, but (the global crisis) will surely affect the real Japanese economy,” Aso told a parliamentary committee.
“We must carefully monitor the situation and take appropriate action when needed,” he said.
Japan’s stock market fell sharply for a second straight day while the yen soared against the dollar and the euro. A strong yen makes Japanese exports — already wobbly due to the global slowdown — less competitive overseas.
Aso said that indicators of the U.S. economy were “falling across the board.”
“This will surely affect Japanese exports. It will also affect Chinese exports. And when that happens, it will affect Japanese exports to China,” Aso said.
The United States and China are the two largest commercial partners for Japan, whose recovery from recession in the 1990s was driven by exports.
Japan’s economy is again teetering on recession due to the global slowdown and tepid consumer spending.