Tokyo stocks close down 1.13pc

Saturday, August 04, 2012 - Tokyo—Tokyo stocks closed down 1.13 percent on Friday, as the yen stayed strong after the European Central Bank (ECB) dashed hopes of immediate action to solve the eurozone crisis.

The Nikkei 225 index at the Tokyo Stock Exchange lost 98.07 points to 8,555.11 while the Topix index of all first-section issues gave up 1.23 percent, or 9.04 points, to 723.94.

Shares in electronics giant Sharp dived nearly 30 percent to their lowest level in almost 40 years, after warning its annual loss would be bigger than first thought.

Tokyo shares took a hit after the ECB held off announcing any immediate measures to solve the region’s debt crisis, sending US and European stocks down along with the euro.

“We’re seeing an unwinding of last week’s ‘risk-on rally’ after ECB president (Mario) Draghi pledged support for the euro at all costs,” an equity trader at a foreign brokerage told Dow Jones Newswires.

Investrust CEO Hiroyuki Fukunaga said: “The strong yen-effect on corporate earnings is undeniable. “There really is no reason to believe that the currency market pressure is going to let up any time soon, putting severe strain on exporters’ ongoing competitiveness.

“The outlook for the second quarter and the fiscal second half is not that good, either,” he said. A strong yen hurts exporters’ earnings as it reduces their repatriated income.—APP