Friday, March 22 07:23:20
Japan's Nikkei average shed 2.4 percent today as concerns mounted that Cyprus may be forced to exit the euro zone after the European Union gave the island's government until Monday to raise the billions of euros it needs to secure a bailout.
The Nikkei ended 297.16 points lower at 12,338.53, retreating from 12,650.26 hit on Thursday, its highest intraday level since early September 2008.
The benchmark lost 1.8 percent on the week, its second weekly loss out of the past 19 weeks and the biggest weekly decline since November.
Exporters with high exposure to Europe led the declines, with Mazda Motor Corp dropping 2.7 percent, Nikon Corp losing 3.2 percent and Shimano Inc shedding 6.3 percent.
"These are some of the stocks which investors want to unload when uncertainty over Europe grows," said Naoki Fujiwara, a fund manager at Shinkin Asset Management.
Stock losses accelerated in the afternoon trade, especially in the last 10 minutes, as investors locked in profits before the weekend.
"They were quick to take profits as they are worried that U.S. stocks may fall later in the day on Cyprus fears," said Kenichi Hirano, a strategist at Tachibana Securities.
The heightened worries about Cyprus and risk of contagion in the euro zone have seen investors seek shelter in the safe-haven yen. That has put pressure on the Nikkei as investors fret the recent weakening trend in the yen may stall and undermine the export-driven economy.
The yen was quoted at 94.71 to the dollar on Friday after gaining 1.2 percent on Thursday, and was up 0.2 percent against the euro at 122.13 after rising 1.5 percent on Thursday.
If the government of Cyprus fails to secure enough funds, it could face a collapse of its financial system that could push it out of the euro currency zone.
The broader Topix dropped 1.9 percent to 1,038.57 in a relatively light trade, with 2.46 billion shares changing hands, compared with last week's average daily volume of 3.72 billion.
"Yesterday's rally (to a fresh 4 1/2-year high) gave the market a feeling of some accomplishment. So investors locked in profits before the weekend," said Yuya Tsuchida, a strategist of Toyo Securities.
"Unless significant progress is made on Cyprus problem or (Bank of Japan Governor Haruhiko) Kuroda calls an emergency board meeting, investors are likely to be in risk-off mode for a while, probably until the Bank of Japan's first policy meeting (on April 3 and 4)." (C) Reuters