Tokyo stocks fell to a fresh 17-year closing low today as earnings woes spread from the high-tech sector to traditional manufacturers because of the prospect of a prolonged economic slump.
The Nikkei average ended down 321.10 points or 3.05 per cent at 10,195.69, a level not seen since August 1984. It was the Nikkei's biggest percentage drop since August 9th when it fell 3.36 per cent.
Also weighing on the market were falls in Asahi Bank Ltd and Daiwa Bank Ltd, which dropped because investors were unconvinced about the benefits of a potential merger between the two lenders.
Non-tech issues are overtaking high techs to lead the Tokyo market lower, making Tokyo's slide broadbased, said senior strategist at Mizuho Investors Securities Mr Masatoshi Sato.
"Sentiment is getting worse, although this may be an unavoidable phase for this market to go through before hitting a firm floor," Mr Sato said.
"It seems that Tokyo stocks have fallen to low enough levels. But this downward momentum may not cease until we see the Nikkei dipping below the 10,000 threshold," said senior portfolio manager at Mitsui Marine Asset Management Mr Shuji Terao.
The capital-weighted TOPIX index fell 24.85 points or 2.30 per cent to 1,055.98. The broader index is still 7.2 per cent above its post-bubble closing low of 980.11 marked in October of 1998 when the nation was in a financial crisis.
Trading was moderate, with 693.65 million shares changing hands on the first section of the Tokyo Stock Exchange (TSE), down from 747.87 million on Friday. Decliners surpassed advancers 1,166 to 228 on the first section.