Japan's Nikkei stock average sank 1.1 per cent to a two-month closing low today, with exporters such as Sony Corp hurt by a stronger yen, while anxiety over fiscal problems in Europe continued to dent investor confidence.
Kirin Holdings fell more than 7 per cent after saying that it and fellow brewer Suntory had scrapped a plan to form one of the world's largest food and beverage makers, citing differences over governance and a merger ratio.
Toyota fell 1.1 per cent to 3,280 yen despite spending much of the day in positive territory after its president apologised on Friday for safety problems and said the carmaker would bring in outside experts to review quality controls.
A source familiar with its plans said later on Monday that the company is preparing a recall of its new Prius hybrid car as early as tomorrow in Japan, followed by similar steps in the United States, Europe and other markets.
The benchmark Nikkei lost 1.1 per cent to 9,951.92, its lowest close since December 10th, though it dipped as far as 9,942.05 at one point.
The broader Topix lost 1 per cent to 883.01.
After the bell, Sumitomo Mitsui Financial Group, Japan's third-largest bank by assets, posted a three-fold rise in April-December profit, aided by an improvement in its stock portfolio and a decline in bad loans, and stuck to its full-year forecast.
The dollar and yen had gained on Friday as worries about euro zone fiscal stability, particularly in countries like Greece and Portugal, pushed investors further away from riskier assets.
The euro was down 0.4 per cent at 121.92 yen, after falling as low as 120.64 yen on Friday to its lowest in almost a year. The dollar was trading around 89.34 yen after earlier falling further towards 89 yen.
Investors fret about a stronger yen as it eats into exporters' profits when they are repatriated.
Sony slipped 3.6 per cent to 2,973 yen, while Honda declined 2.1 per cent to 3,035 yen.
Panasonic lost 5.3 per cent to 1,318 yen after market analysts said UBS had downgraded the stock to "neutral" from "buy", with additional downward pressure from the yen.
The move came even though the electronics maker reported on Friday that its quarterly profit jumped more than threefold to the highest level in five quarters as it cut costs and enjoyed robust TV sales, and lifted its outlook to beat market expectations.
The Nikkei business daily said on its website that Toyota was also considering a recall for the Sai and Lexus gasoline-electric hybrid models that use the same brake system as the Prius.
The stock has lost one-fifth of its value in the past two weeks.
Trading volume on the Tokyo stock exchange's first section slipped to 2 billion, its lowest since late January. Declining shares outpaced advancing ones by nearly 3 to 1.
Reuters