Japan stocks retreat on surging yen

By TOMOKO A. HOSAKA

posted: 3 MINUTES AGO

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TOKYO -Japanese stocks fell Thursday as the dollar tumbled to a 14-year low against the yen.

The benchmark Nikkei 225 stock average lost 58.40 points, or 0.6 percent, to 9,383.24. The broader Topix index fell 0.5 percent to 829.56.

Indications that U.S. interest rates would remain low for awhile fueled the dollar-selling mood, driving investors toward riskier but higher yielding assets such as gold, oil and emerging market currencies.

The dollar sank to 86.27 yen in Tokyo trading, the lowest since July 1995. Exporters, whose overseas income erodes as the yen rises, retreated in response.

Japanese Finance Minister Hirohisa Fujii tried to offer assurance that he was closely monitoring the situation and said he would "take appropriate steps if foreign exchange rates move abnormally." But that did little to ease investor worries.

"His comments don't really mean anything," said Tsuyoshi Segawa, equity strategist at Mizuho Securities. "He is the finance minister, so of course he should be monitoring foreign exchange closely."

Markets want to know that the government is actually studying effective measures, as well as its plans to fight deflation and foster growth, Segawa said.

Toyota Motor Corp. fell 1.2 percent to 3,380 yen. The world's biggest automaker said Thursday that it will slash bonus pay for managers as it tackles a massive recall in the U.S. and deep losses for the second straight fiscal year.

It announced in the U.S. on Wednesday a massive recall affecting 4 million vehicles to replace the gas pedals that can get stuck in the floor mats and cause sudden acceleration.

Electronics makers also retreated, with Canon Inc. down 2.1 percent to 3,290 yen and Sony Corp. off 1.9 percent at 2,370 yen.

Among gainers, Sumitomo Metal Mining Co. benefited from surging gold prices. The issue rose 1.7 percent to 1,470 yen.

In currencies, the dollar was trading at 86.98 yen Thursday afternoon from 87.35 yen late Wednesday. The euro fell to $1.5077 from $1.5132.

2009-11-26 02:30:38