Nikkei pares some losses, ends morning session down 5.5 percent on earnings worries

Written by Writer on Thursday, October 23rd, 2008

Nikkei pares some losses, ends morning session down 5.5 percent on earnings worries

TOKYO (AP) — Japanese shares dropped sharply for a second day Thursday, tracking another drop on Wall Street, as jittery investors dumped stocks on growing worries over a slump in the global economy and weak corporate earnings.

The benchmark Nikkei 225 stock average pared earlier losses to sink 478.95 points, or 5.5 percent, to 8,195.74 at the close of morning trading. At one point, it was down 7.6 percent.

“Selling on Wall Street triggered yet another selling in Tokyo,” said Kazuhiro Takahashi, equity strategist at Daiwa Securities SMBC Co. Ltd. “Sentiment remained depressed as weak corporate earnings intensified worries over a slowdown in the global economy.”

On Wednesday in New York, the Dow Jones industrial average tumbled 5.7 percent to 8,519.21.

Investors in Japan are worried that U.S. economy, a vital export market, is sliding into a recession. Hundreds of U.S. companies are reporting third-quarter results and many are issuing murky forecasts, stirring unease.

For example, Wachovia Corp., which is being bought by Wells Fargo & Co., reported that it swung to a huge loss in the third quarter, while drugmaker Merck & Co. said its quarterly profit fell 28 percent and that it would cut more than 10 percent of its work force.

Investors in Tokyo also traded with caution ahead of the release of Japanese corporate earnings that start in earnest next week with Canon Inc. on Monday and Honda Motor Co. on Tuesday. Japanese electronics powerhouse NEC Corp. have downgraded their earnings estimates amid an economic downturn at home and abroad.

The broader Topix index was down 4.8 percent to close at 846.32 in the morning session.

Japan’s top automaker Toyota Motor Corp. lost 4.2 percent to 2,070 yen, and Honda plunged 8.2 percent to 2,075 yen. Sony Corp. lost 8 percent to 2,255 yen.

Japan’s largest brokerage, Nomura Holdings Inc., lost 6.4 percent to 1,153 yen.

(Mainichi Japan) October 23, 2008