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Tokyo: Stocks open down 0.62%

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[TOKYO] Tokyo stocks opened 0.62 per cent lower on Tuesday on early profit-taking following a decline in US bourses and a stronger yen.

Moody's Investors Service downgraded Japan's sovereign debt rating by one notch to A1 from Aa3 on Monday, but its impact on Japanese stocks appears limited, brokers said.

The Nikkei 225 index at the Tokyo Stock Exchange was down 109.04 points, to 17,481.06 at the start.

"Stocks remain slightly overbought and sensitive to the dollar, so the Nikkei is likely in for a sluggish start," says Shunichi Otsuka, general manager of research and strategy at Ichiyoshi Asset Management.

The dollar was at 118.31 yen early Tuesday, declined from 118.40 yen in New York Monday afternoon.

The euro also sank to 147.53 yen from 147.64 yen in US trade, while buying US$1.2470 against US$1.2469.

A stronger yen is a negative for Japanese exporters as it makes them less competitive abroad and decreases profits when they are repatriated.

Moody's action is unlikely to have much impact on stock trading, however, Otsuka told Dow Jones Newswires.

"Little of Japan's debt is held by foreigners, so unless there is a surprise upward impact on interest rates, the picture for equity investing should not be much harmed," Otsuka said.

"Any softness in today's market should not be directly attributable to the downgrade," he added.

In New York, retail and tech equities led US stock markets lower Monday following a disappointing kickoff to the holiday shopping season, with the Dow Jones Industrial Average down 0.29 per cent at 17,776.80.

Investors were also paying attention to Japanese politics as an official campaigning kicked off for a snap election in two weeks.

AFP