(Updates to midmorning)
TOKYO, Nov 20 (Reuters) - Japan's Nikkei share average
tumbled to a 16-month low and the broader TOPIX index hit a
two-year low on Tuesday, battered by a Wall Street tumble set off
by renewed credit fears and worries about the health of the U.S.
economy.
A faltering dollar and hefty sales of futures helped lead the
Nikkei sharply lower from the start, with the benchmark average
opening at its lowest level since July 2006 and then falling
further.
Though shares were sold across the board, construction firms
such as Kajima Corp <1812.T> were especially hard hit. Exporters
and financial firms also suffered.
"The market appears to have found some temporary support
around today's low, but this could change after the Hong Kong and
Shanghai markets start trading, and the market will also watch
movements of the dollar against the yen," said Masayoshi Okamoto,
head of dealing at Jujiya Securities.
"It's a Black November."
The Wall Street tumble was set off when Goldman Sachs
recommended investors sell shares of Citigroup <C.N>, saying the
bank may have to write off $15 billion as mortgage losses reduce
earnings. [ID:nN19100738]
Credit worries fanned by the Citigroup downgrade were
compounded when the world's biggest reinsurer, Swiss Re
<RUKN.VX>, announced a $1.07 billion write-down.
"Technically, the market is oversold, which normally would
lead to short-covering -- and probably will at some point today,
too," said Hiroichi Nishi, general manager of equity marketing at
Nikko Cordial Securities. "But given how bad the whole
environment now is, there's no reason to really buy strongly."
At 0059 GMT the benchmark Nikkei <.N225> was down 1.6 percent
at 14,803.67. It earlier hit 14,757.22, the lowest since
14,560.67 hit on July 24, 2006.
The TOPIX <.TOPX> index was down 2 percent at 1,428.18, its
lowest since October 2005.
The dollar hovered near an 18-month low against the yen,
slipping as low as 109.60 yen in early Tokyo trade, but it later
edged back up towards 110 yen.
EXPORTERS HIT, BANKS BATTERED
The strong yen took an inevitable toll on exporters,
especially car firms, with Nissan Motor Co <7201.T> down 3.8
percent at 1,101 yen while Honda Motor <7267.T> slipped by 3.2
percent to 3,670 yen.
Canon Inc <7751.T> fell 1.8 percent to 5,380 yen and Sony
Corp <6758.T> slipped 1.7 percent to 5,230 yen.
Bank shares were hit by concerns about mortgage losses.
Mitsubishi UFJ Financial Group Inc <8306.T> slid 3.8 percent
to 911 yen and Mizuho Financial Group Inc <8411.T> fell 3.6
percent to 507,000 yen. Sumitomo Mitsui Financial Group Inc
<8316.T> lost 3.8 percent to 760,000 yen.
Sumitomo Mitsui said on Monday it expected to post up to 87
billion yen ($790 million) in valuation losses on
subprime-related investments in the current business year to
March. [ID:nT227604]
Construction firms suffered as well, with Kajima tumbling 6
percent to 296 yen and Kumagai Gumi <1861.T> down 4.4 percent to
129 yen.
Market participants said this appeared to be due to the
growing bite on business by tighter construction rules.
A rare bright spot was Aozora Bank Ltd <8304.T>, which surged
7.5 percent to 344 yen after Aozora and Sumitomo Trust & Banking
Co <8403.T> said they planned to form a business alliance but
denied a newspaper report that they may eventually merge.
(Reporting by Elaine Lies; Editing by Mike Miller)
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Keywords: MARKETS JAPAN STOCKS