TOKYO: Tokyo stocks fell 2.15 percent Thursday as the yen gained strength after disappointing data, including weak Chinese manufacturing figures, dented investors' appetite for risk.
The benchmark Nikkei-225 index lost 317.35 points to finish at 14,449.18, while the Topix index of all first-section shares slipped 1.97 percent, or 23.96 points, to 1,194.56.
Tokyo's fall snowballed as the dollar slumped against the yen in forex trade, pushed down as weak data from the US, Japan and China raised new questions about the state of the global economy.
New US home construction and building permits plunged more than expected in January amid severe winter weather in large parts of the country, data showed Wednesday.
Then, on Thursday, Japan said it logged its worst-ever January trade deficit, while a key index of Chinese manufacturing contracted further in February to its lowest level in seven months, a worrying sign for the strength of the world's second-largest economy.
"Profit-taking on the back of worsening sentiment over emerging markets accelerated with the China data," David Baran, co-CEO at hedge fund Symphony Financial Partners, told Dow Jones Newswires.
"I think Japan's recovery story remains intact, but its markets are affected so much by outside factors that making bets on intrinsic values is difficult," he said.
China is a major market for Japanese exports, meaning that any slowdown could further exacerbate Japan's already gloomy trade picture.
After surging in 2013 to its best annual run in over four decades, the Nikkei has turned down about 11 percent since the start of this year as global markets were hit by heavy volatility.
The weak China data come as the International Monetary Fund called for the Group of 20, which meets in Sydney at the weekend, to boost growth as it warned of risks to the global economy, from deflation in Europe to high volatility in emerging economies.
In forex trade, the dollar slumped to 101.87 yen, from 102.31 yen Wednesday in New York where it won support from minutes of the Federal Reserve's January meeting, which revealed some policymakers pushed to raise interest rates.
The yen is a so-called safe haven currency and investors tend to buy the unit in times of uncertainty and turmoil, but a stronger yen hurts the profitability of Japanese exporters.
Financial stocks were hit hard Thursday, with brokerage Nomura losing 2.39 percent to finish at 692 yen while Dai-ichi Life shed 3.44 percent at 1,513 yen.
Hitachi was down 3.07 percent to 787 yen, while construction machinery giant Komatsu lost 3.15 percent to end at 2,058 yen. (AFP)