[August 01, 2008]

2ND LD: Tokyo stocks plunge on growing pessimism over U.S., Japan outlook+

(Japan Economic Newswire Via Acquire Media NewsEdge) TOKYO, Aug. 1_(Kyodo) _ (EDS: ADDING DETAILS AND PRICES)

Tokyo stocks closed over 2 percent lower Friday as some investors grew increasingly pessimistic about the future course of the U.S. economy and Japan's business outlook, while others opted to remain on the sidelines before the U.S. July jobs report due out later in the day.

The 225-issue Nikkei Stock Average lost 282.22 points, or 2.11 percent, from Thursday to 13,094.59. The broader Topix index of all First Section issues on the Tokyo Stock Exchange was down 30.69 points, or 2.35 percent, to 1,272.93.

A wide range of issues came under heavy selling pressure, such as mining and consumer finance issues. Only three sectors saw gains, including pulp and paper issues.

Japanese Prime Minister Yasuo Fukuda's Cabinet reshuffle to be carried out later in the day, meanwhile, did little to turn around the bearish sentiment in the Tokyo market as most investors from the start held no major hopes it would help prop up Japan's economy, which is showing growing signs of deterioration, brokers said.

Fumiyuki Nakanishi, chief equity strategist at SMBC Friend Securities Co., said, "If the government really wants to change its economic policies (to shore up the Japanese economy), it needs to think out of the box."

In order to elicit any reaction from the Tokyo stock market, there is a need for a "surprise appointment," said Nakanishi.

Tokyo stocks opened on a weak note and widened their losses throughout the day on the back of weakness throughout Asian equity markets.

"Investors liquidated their positions fearing that the Dow Jones index is likely to fall after the U.S. jobs data turn out to be weak," said Nakanishi.

The July jobs data to be released later Friday are a barometer to gauge the health of the U.S. economy.

Tokyo market players keep close tabs on business and economic developments in the United States as the climate there heavily influences Japanese exporters, as well as overseas investors' activity in the Tokyo stock market.

Tsuyoshi Segawa, an equity strategist at Shinko Securities Co., said the Tokyo market was also weighed down by sluggish April to June corporate earnings reports as many firms revised downward their full-year earnings forecasts. The earnings reports have been coming out in full swing from this week.

Financial issues were weak, led by Sumitomo Mitsui Financial Group, which plunged 65,000 yen, or nearly 8 percent, to 783,000 yen, after the mega bank said Thursday its group net profit fell 51.5 percent in the three months through June from a year before to 58.10 billion yen.

Another mega bank and the day's value leader, Mizuho Financial Group, fell 19,000 yen, or nearly 4 percent, to 507,000 yen.

Auto and high-tech export-oriented issues also performed poorly, weighed down by concerns about a U.S. economic slowdown.

Among them, Toyota Motor shed 50 yen, or over 1 percent, to 4,610 yen, Sharp lost 76 yen, or over 5 percent, to 1,430 yen, and TDK, a manufacturer of electronic parts, fell 250 yen, or nearly 4 percent, to 6,250 yen.

On the First Section, declining issues outnumbered advancing ones 1,449 to 208, with 63 others remaining unchanged.

Japanese consumer electronics maker Hitachi was among the few bright spots, increasing 25 yen, or over 3 percent, to 805 yen. Hitachi said Thursday it booked 31.56 billion yen in group net profit in the April to June period.

Nissin Food Products rose 150 yen, or over 4 percent, to 3,690 yen after the instant noodles maker said Thursday in its April to June earnings report that its pretax profit was up 1 percent.

Trading volume on the main section came to 2,098.73 million shares, up from Thursday's 2,080.18 million. Volume leader Urban, a condominium developer, shed 12 yen, or over 9 percent, to 120 yen.

The TSE's Second Section index was down 18.57 points, or 0.67 percent, to 2,745.43 on a volume of 27.86 million shares. On the Osaka Securities Exchange, the near-term September Nikkei 225 index futures contract was down 330 points to 13,030.

Copyright ? 2008 Kyodo News International, Inc.

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