Tokyo stocks plunge on US recovery fears

Tokyo stocks fell for a fourth straight day Tuesday, with the benchmark Nikkei stock index tumbling 4.18 percent, following U.S. economic data stoking fears about growth in the world's largest economy. Following market concerns recently about capital outflows from emerging economies, brokers here said that investors were in a risk-averse mood from the get-go Tuesday, and were looking to unload positions at early junctures, spurred by worse-than- expected manufacturing data in the U.S. Wall Street closed lower overnight after data showed that U.S. manufacturers expanded in January at the slowest rate in eight months, with the pace of new orders also decreasing sharply. Analysts here pointed to the closely watched data from the Institute for Supply Management (ISM), a key index of which dropped to 51.3 percent from 56.5 percent in December. The reading marked the lowest level since last May, and investor consternation was compounded by The ISM's new-orders gauge tumbling 13.2 points to 51.2 percent, also the lowest level since May. With the employment gauge also sinking 3.5 points to 52. 3 percent, signaling hiring intentions had fallen, traders here said concerns were growing that economic recovery in the U.S. may be slowing. "With the ISM reading turning out weaker than expected, wariness about the upcoming U.S. jobs report for January due out Friday increased," said Masashi Akutsu, an equity strategist at SMBC Nikko Securities Inc. "After running up sharply toward the end of last year, several risk-off factors hit the market this year," Akutsu said. Other strategists said that the environment was forcing investors hands when it came to offloading positions and some market players were looking for excuses to sell. "In this negative investing environment, players are merely looking for reasons to sell," Yoshihiro Okumura, general manager at Chibagin Asset Management said. "With the market now looking deeply oversold, I'd be buying aggressively right here," he said, adding that selloffs like this one are rare and buying opportunities still exist. "The fundamentals of the market haven't changed, only valuations. If data show that the U.S. economic rebound remains largely intact, stock prices could come back quickly," Okumura said. The 225-issue Nikkei Stock Average tumbled 610.66 points from Monday at a four month closing low of 14,008.47, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange fell 57.05 points, or 4.77 percent, to finish at 1,139.27. Tokyo's key export-related issues lost ground owing to the yen rising against the U.S. dollar during trading hours Tuesday. The dollar hit a fresh two-month low against the yen, following the U.S.'s poor manufacturing activity, dipping as low as 100.755 yen, its lowest level against the yen since Nov. 21. Toyota Motor skidded down 5.7 percent to 5,500 yen, while smaller rival Honda Motor reversed 6.3 percent to 3,565 yen. Sony relinquished 3.2 percent to 1,530 yen, Nintendo lost 1.03 percent to 11,900 yen and Panasonic tumbled 6.8 percent to 1,061 yen. Sharp dropped 8.4 percent to 317 yen, while Hitachi Zosen plummeted 18.4 percent to 590 yen after cutting its net profit projection for the current fiscal year by around 50 percent. Trading volume on Tuesday rose sharply to 4.23 billion shares on the Tokyo Exchange's First Section, higher than Monday's volume of 2.92 billion shares, with declining issues trouncing advancing ones by 1,764 to 13.