Tokyo: Stocks fall 1.76% as profit-taking bites

[TOKYO] Tokyo stocks fell for a third session Tuesday on profit-taking, as the Japanese market comes off its highest levels in a quarter-century.

The Nikkei 225 index at the Tokyo Stock Exchange dropped 1.76 per cent, or 360.89 points, to close at 20,096.30, while the Topix index of all first-section shares fell 1.66 per cent, or 27.62 points, to 1,634.37.

Selling pressure grew in late trading after fresh figures showed Japanese consumer confidence slipped in May.

"Players made use of the negative data in order to cash in on recent gains," said Hikaru Sato, a senior technical analyst at Daiwa Securities.

"It is no surprise that the market is unstable following such a strong rise." The Nikkei's longest rally since 1988 - fuelled by a weak yen and bumper corporate earnings - ended last week.

On Tuesday a pick-up in the yen hit Japanese exporters with the dollar at 124.27 yen, against 125.52 yen in Tokyo Monday.

The US currency was dragged down Monday after media reports that US President Barack Obama had told the G7 summit in Germany that the strong dollar "posed a problem".

The White House quickly denied that. Mr Obama told reporters: "I did not say that. And I make a practice of not commenting on the daily fluctuations of the dollar or any other currency."

Toyota shares fell 1.71 per cent to 8,215 yen, tyre maker Bridgestone slipped 2.56 per cent to 4,693.5 yen, and Japan's biggest bank Mitsubishi UFJ sank 1.83 per cent to finish at 884.3 yen.

Investors are also keeping an eye on Greece's long-running bailout talks. It is still unable to reach an agreement with creditors that will unlock much-needed funds to avert a default and possible eurozone exit.

"A lot of people are worried about Greece," Kirk Hartman, chief investment officer of Wells Capital Management, told Bloomberg News.

"It would be better for Greece to restructure, then negotiate. We're in for a long summer," he said.

AFP