Tokyo stocks end 1.52% lower
Monday, 21 January 2013
TOKYO: Tokyo stocks closed 1.52 percent lower on Monday after rallying at the end of last week to a 33-month high, and as the Bank of Japan begins a two-day policy meeting.
The benchmark Nikkei 225 index closed 165.56 points lower at 10,747.74, while the Topix index of all first-section shares fell 0.69 percent, or 6.28 points, to 905.16.
"All eyes are on the Bank of Japan, which should come through to meet expectations for more easing and some kind of inflation target rhetoric," said SMBC Nikko Securities general manager of equities Hiroichi Nishi.
The BoJ is also expected to adopt an annual inflation target of two percent -- a key demand from the new government led by Prime Minister Shinzo Abe -- in a bid to beat the deflation that has haunted Japan's economy for years.
While more monetary easing would put downward pressure on the yen, dealers have been selling the unit in recent months on expectations of such a move by the bank.
The dollar was initially stronger in Tokyo trade, but slipped to 89.58 yen, from 90.08 yen by the end of trade in New York on Friday.
The euro also lost early gains at 119.32 yen from 119.96 yen, while it inched up to $1.3323 from $1.3317.
"Dollar/yen needs to be substantially higher than 90 if the Abe administration is to achieve its two percent inflation target," Deutsche Bank strategist Taisuke Tanaka told Dow Jones Newswires.
"Even if the recent rapid rally in dollar/yen undergoes some correction, we recommend along tactics/strategy with a view to 92 or higher."
Japanese engineering firm JGC, whose workers remained unaccounted for at a remote Algerian gas plant seized by Islamist militants, fell 2.73 percent to 2,562 yen.
Shares in firms linked to the Boeing Dreamliner's safety issues were mixed.
All Nippon Airways finished flat at 179 yen, while its rival Japan Airlines, also a major Boeing customer, rose 0.13 percent to 3,655 yen.
GS Yuasa, which makes Dreamliner batteries at the centre of an ongoing probe, was up 0.95 percent at 318 yen.
The Dreamliner suffered a series of glitches earlier this month, prompting a global alert from the US Federal Aviation Administration that led to the worldwide grounding of all 50 of the planes in operation. (AFP)