Tokyo stocks slid Wednesday as overnight weakness in U.S. stocks and the dollar sent major issues including technology and auto stocks lower. The American currency was higher against the Japanese yen but lower against the euro.
The Nikkei Stock Average of 225 selected issues lost 97.53 points, or 0.84 percent, to close at 11,500.18 points. The index fell 53.31 points, or 0.46 percent, Tuesday.
The dollar was trading at 104.72 yen at 5 p.m. Wednesday, up 0.18 yen from late Tuesday in Tokyo and above the 104.02 yen it bought in New York later that day. The dollar traded between 103.94 yen and 104.88 yen in Tokyo.
On the stock market, Wall Street's losses overnight and the dollar's early weakness against the yen combined to dampen sentiment. A weaker dollar hurts Japanese exporters' overseas earnings when converted back into yen.
Masatoshi Sato, a senior strategist at Mizuho Investors Securities, said Wednesday's drop was largely due to external factors overnight, such as the Dow Jones industrial average's worst one-day fall since May 19, 2003, and the jump in crude oil prices to above $50 a barrel.
"A slowdown in overseas demand is also a concern," Sato said, referring to data released earlier Wednesday that showed Japan's trade surplus plunged 59.9 percent in January on year, partly due to weak exports.
Tech stocks Canon Inc., Pioneer Corp. and Sony Corp. fell, as did automakers Nissan Motor Co. and Toyota Motor Corp. Mitsubishi Tokyo Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. declined. Telecom companies KDDI Corp. and NTT DoCoMo Inc. also finished lower.
The broader TOPIX index, which includes all issues on the market's first section, shed 9.54 points, or 0.82 percent, to 1,152.95 points Wednesday afternoon. The TOPIX shed 4.25 points, or 0.36 percent, the day before.
First-section volume rose to 1.512 billion shares, from Tuesday's 1.340 billion shares. Decliners beat advancers 1,060 to 415, while 127 issues were unchanged.
In New York on Tuesday, U.S. stocks plunged on higher oil prices.
The Dow Jones industrial average fell 174.02, or 1.61 percent, to 10,611.20, its lowest close since Feb. 3. The Nasdaq composite index dropped 28.30, or 1.37 percent, to 2,030.32, its worst close since Jan. 25.
In currencies, the dollar stabilized from its overnight New York levels after South Korean officials on Wednesday denied reports of diversification of official dollar-denominated reserves.
"Reports that the Bank of Korea will sell dollar assets are false," the BOK said in a statement. Kang Myun-Mo, director general of the BOK's reserve management department, said the bank would hold onto its dollar asset reserves.
A Japanese Finance Ministry official also said Tokyo has no plans to diversify its foreign exchange reserves, further easing fears that some countries may cut their dollar holdings.
In New York on Tuesday, the American currency posted its largest one-day loss versus the euro since last August and dropped to a seven-year low against the South Korean won over the reports.
The euro rose to $1.3217 late Wednesday afternoon in Tokyo from US$1.3181 late Tuesday and to 138.38 yen from 137.89 yen.
The yield on Japan's benchmark 10-year government bond fell to 1.4050 percent from Tuesday's finish of 1.4300 percent. Its price rose 0.21 point to 99.09.