Tokyo: Japanese stocks fell 2 per cent on Friday as the yen advanced against the dollar, battering exporters such as Honda Motor Corp, with growing worries about the U.S. economy also weighing on prices.
Mizuho Financial Group and other financials also slipped after U.S. Federal Reserve Chairman Ben Bernanke warned that small banks that had invested heavily in real estate could collapse, renewing fears about a credit squeeze.
"This will have an impact in terms of credit worries but, even more, it reflects growing concern about the worsening U.S. economy," said Yutaka Miura, senior technical analyst at Shinko Securities.
"But for Tokyo, the real worry is the yen's rising against the dollar, which is going to make things really tough."
Bernanke said on Thursday that small banks that invested heavily in real estate could collapse as the housing downturn drains their capital, raising the fear of more capital write-offs in general.
These fears were fed after American International Group Inc posted its biggest-ever quarterly loss on Thursday, hurt by a write-down of derivatives exposed to bad mortgage investments.
As of 0038 GMT the benchmark Nikkei was down 2.1 per cent, shedding 296.06 points to 13,629.45. The broader TOPIX was also down 2.1 per cent at 1,324.46.
Exporters were hit hard by the dollar's fall against the yen to 104.65 yen by midmorning in Tokyo. Honda was down 3.6 per cent at 3,240 yen, Canon Inc fell 3 per cent to 4,780 yen and Toyota Motor Corp was off 2.7 per cent at 5,750 yen. Financials also slipped, with Mitsubishi UFJ Financial Group down 3 per cent at 956 yen and Mizuho down 2.9 per cent at 462,000 yen. Millea Holdings Inc, Japan's largest non-life insurer, was down 2.7 per cent at 3,880 yen.
Mizuho Financial Group and other financials also slipped after U.S. Federal Reserve Chairman Ben Bernanke warned that small banks that had invested heavily in real estate could collapse, renewing fears about a credit squeeze.
"This will have an impact in terms of credit worries but, even more, it reflects growing concern about the worsening U.S. economy," said Yutaka Miura, senior technical analyst at Shinko Securities.
"But for Tokyo, the real worry is the yen's rising against the dollar, which is going to make things really tough."
Bernanke said on Thursday that small banks that invested heavily in real estate could collapse as the housing downturn drains their capital, raising the fear of more capital write-offs in general.
These fears were fed after American International Group Inc posted its biggest-ever quarterly loss on Thursday, hurt by a write-down of derivatives exposed to bad mortgage investments.
As of 0038 GMT the benchmark Nikkei was down 2.1 per cent, shedding 296.06 points to 13,629.45. The broader TOPIX was also down 2.1 per cent at 1,324.46.
Exporters were hit hard by the dollar's fall against the yen to 104.65 yen by midmorning in Tokyo. Honda was down 3.6 per cent at 3,240 yen, Canon Inc fell 3 per cent to 4,780 yen and Toyota Motor Corp was off 2.7 per cent at 5,750 yen. Financials also slipped, with Mitsubishi UFJ Financial Group down 3 per cent at 956 yen and Mizuho down 2.9 per cent at 462,000 yen. Millea Holdings Inc, Japan's largest non-life insurer, was down 2.7 per cent at 3,880 yen.
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