Tokyo's Nikkei dives 12.4%, suffers record points loss

TOKYO

Tokyo stocks sank more than 12 percent Monday, battered by a resurgent yen and weak U.S. jobs data that fuelled fears of a recession in the world's top economy.

The benchmark Nikkei 225 index plunged 12.40 percent, or 4,451.28 points, to 31,458.42 — its largest points drop in history — while the broader Topix index lost 12.23 percent, or 310.45 points, to 2,227.15.

The yen surged to 141.73 against the dollar, a level not seen since early January, from 146.52 yen in New York on Friday.

The Japanese currency has rapidly appreciated from levels of near 162 in early July, its weakest value since 1986.

A stronger yen is a negative factor for Japanese exporters and the recent rally has been fuelled by central bank policy decisions that have reversed the trends of recent years.

The Bank of Japan last week raised interest rates for the second time in 17 years, with talk of another rate hike to come, while the U.S. Federal Reserve has hinted at a cut as soon as September.

Daiwa Securities said the losses in Tokyo reflected "deepening concerns over the uncertain U.S. economy".

"Investor sentiment was down as the U.S. employment data for July came in lower than expected, raising fears that the U.S. economy is slowing more than expected," IwaiCosmo Securities said.

"The market was also weighed down by the yen's appreciation against the dollar and as expectations for exporters' upbeat financial results receded," the brokerage added.

On Wall Street on Friday, the Dow Jones Industrial Average finished down 1.5 percent as data showed the U.S. jobs market cooled much more than expected in July.

European stock markets also closed sharply in the red.

In an attempt to calm volatility in the market, futures trading was suspended for 10 minutes as a so-called "circuit-breaker" on the Nikkei and Topix indexes on the Osaka Exchange in Japan's western metropolis, an exchange official said.

Semiconductor shares plunged with Tokyo Electron nosediving 18.48 percent to 22,055 yen and Advantest tumbling 15.84 percent to 5,313 yen.

Toyota plummeted 13.65 percent to 2,232 yen.