Tokyo stocks resume slide

Japanese markets slipped again on Thursday after breaking more than a week-long slide on Wednesday, with the benchmark Nikkei index falling 0.67 per cent.

Counting Thursday’s 103.26 point drop to 15,396, the index is roughly 1,500 points below where it was before it turned downward at the beginning of the month on US mortgage market jitters.

However, the broader Topix index was flat Thursday, rising 1.15 points, or 0.08 per cent, to 1,498.86.

The Nikkei was a mixed picture, with more stocks rising than falling after a volatile day that saw the market gain in the morning but lose steam and turn negative in the afternoon.

Bank stocks rose in the morning session in spite of news after Wednesday’s close that three institutions had been hit harder than expected by subprime-related losses.

Mizuho Financial Group, one of the affected banks, closed down 0.7 per cent to Y546,000 after rising earlier in the day. Aozora Bank, another member of the trio, slid 1.46 per cent to Y338, but the last of the group, Shinsei Bank, rose 4.71 per cent to Y356.

Nikko Cordial, Japan’s third-biggest brokerage, rose 7.2 per cent to Y1,660 after the terms of its stock swap with Citigroup were amended.

TDK was a big loser, dropping 6.1 per cent to Y7,350 after UBS put a “sell” recommendation on the electronic components maker, lowering its price target from Y9,500 to Y7,000.

Tokyo stock exchange data showed that foreigners, the principal driver of the Japanese market in recent years, were net sellers last week, selling a net Y282bn of shares.

Strategists say some of the selling is driven by the need to cash in liquid stocks to close positions outside Japan while there is also some nervousness about the rising yen and patchy economic data.

Japanese government bond futures rose towards a 21-month high as investors sought safety and bet that the Bank of Japan would be unable to raise rates for some time. The yield on the benchmark 10-year JGB fell 1.5 basis points to 1.5 per cent, roughly where it was when interest rates were zero and the central bank was operating its ultra-easy monetary policy.