Tokyo: Nikkei slips to 7-month low, posts biggest weekly fall in 1-1/2 years

[TOKYO] Japanese stocks slipped to seven-month lows, with the Nikkei posting its biggest weekly fall in almost a year and a half with speculators dumping futures while investors stayed risk-averse ahead of the release of a key U.S. jobs report later in the day.

The Nikkei lost 2.2 per cent to close at 17,792.16, shedding seven per cent throughout its fourth straight week of declines, its largest weekly fall since April 2014.

The benchmark briefly touched 17,737.01, its lowest level since Feb 10, with the yen's gains souring already weak sentiment strained by concerns of a hard landing in China.

The dollar dropped to 119.10 yen in the afternoon, the lowest level since August 26, but gained slightly to 119.31 by the time Tokyo markets closed.

A bounce in the yen against the euro and dollar triggered a sell-off in futures, presumably from such investors as global macro funds. "I believe the medium and long term trend of equities in Japan has already turned downward and we're seeing lots of global investors reduce their exposure to Japanese equities,"said Makoto Kikuchi, chief executive of Myojo Asset Management. "Foreign investors are selling futures in preparation for reducing their cash equities portfolios and changing their asset location dramatically." The selling in futures drove lower index-heavy stocks such as Fast Retailing Co, SoftBank Group and Fanuc Corp ; down 2.8 per cent, 4 per cent and 2 per cent, respectively.

Exporters were mostly lower, with Toyota Motor Corp falling 2.5 per cent and Panasonic Corp dropping 4 per cent.

In the last week, net selling of Japanese cash and futures stocks by foreign investors hit a record high as they shunned riskier assets on worries that a China-led slowdown could hurt global growth.

The broader Topix dropped 2.1 per cent to 1,444.53, losing 6.8 per cent for the week.

REUTERS