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Japan's Nikkei falls 4.5% in first session after quake | |
(about 1 hour later) | |
Japanese shares have tumbled on the first trading day after the massive earthquake and tsunami that hit the country's northeast shore. | |
The benchmark Nikkei 225 Index fell 4.5%, while the broader Topix index was trading 6% lower. | |
At one point the Nikkei dropped by almost 6%, knocking more than $150bn off its total market value. | |
The Bank of Japan will inject 7 trillion yen ($85bn; £52.9bn) into the banking system to stabilise markets. | |
Immediately after the quake, the central bank pledged to "do its utmost" to limit its impact, including providing liquidity to money and banking markets. | |
The deadly quake and subsequent tsunami hit Japan just before the markets closed on Friday. | |
"The recent major earthquake is bound to exert downward pressure on Japanese equities as a whole over the near term," Nomura said in a note to investors. | |
Elsewhere in the region, the main markets have also fallen on Monday, though the declines were smaller than those seen in Japan. | |
South Korea's Kospi share index slid 0.9%. Singapore's STI index shed more than 0.4% and Taiwan's main index dropped 0.8%. | |
Production troubles | |
Japanese carmakers and electronics firms led the declines on Monday. | |
Early trading was complicated because many sellers of shares struggled to find buyers. As a result, a number of stocks remained untraded once the markets had opened. | |
Shares of Toyota Motors, the world's biggest automaker, fell 8.9% after it suspend operations at all of its 12 Japanese factories. | |
Japanese factories account for 38% of Toyota's overall production. | |
Honda, Japan's third-largest automaker, fell 9.1%. The company makes about a quarter of all its cars in Japan. | |
Electronics companies including Hitachi and Toshiba also dropped, shedding more than 15%. | |
Japanese Economics Minister Kaoru Yosano was quoted by the Jiji news agency saying that he was keeping a close eye on the movement of Japan's currency, the yen, which has strengthened. | |
Economists said that a stronger yen may make it harder for companies to sell their goods abroad, further hurting their earnings. | |
'Weakened Japan' | |
Analysts said that there were concerns about the speed with which Japan's economy could rebound from the problems. | |
Last month Japan was overtaken by China as the world's second-largest economy. | |
"In the short term, the market will almost surely suffer and stocks will plunge," said Koetsu Aizawa, economics professor at Saitama University. | |
"People might see an already weakened Japan, overshadowed by a growing China, getting dealt the finishing blow from this quake." | |
Some analysts have forecast that Japan's economy may lose as much as a percentage point in growth this year because of the quake. | |
Japan's economy contracted by a more-than-expected 1.3% in the final three months of 2010. | |
Rebuilding effort | |
However, while there are concerns about the short-term impact on the economy, there are industries where investors are looking to increase their holdings. | |
Shares in Japanese construction firms have surged in value on Monday as they are expected to play a central role in rebuilding the country in coming months. | |
Foreign firms have also been in focus, notably technology producers and carmakers, where shares have been gaining. | |
Investors, for example, are expecting an increase in orders for Korean goods because production has been suspended in many of Japan's factories. |