Nikkei Plunges 6.2% After Deadly Quake

By: CNBC.com with Reuters


Asian stocks outside Japan edged up on Monday, with demand for commodity-related shares offsetting the steep drop in Japanese markets following a massive earthquake and tsunami.

Construction and refinery shares across the region saw healthy demand on hopes of bigger profits because of large-scale reconstruction efforts as the country battled to prevent a nuclear catastrophe after the natural disasters that may have killed more than 10,000 people

The FTSE CNBC Asia 100 Index [.FTFCNBCA 6729.08 -142.44 (-2.07%)], which measures markets across Asia, was lost 2.1 percent.


Japan's Nikkei share average closed down 6.2 percent to 9,620.49 [JP;N225 9620.49 -633.94 (-6.18%)], the biggest single-day decline in two years to the lowest since November 2010, with technology companies such as Kyocera and Canon among the biggest drags on the market.

The broader Topix fell 7.5 percent to 846.96, posting the biggest daily decline since October 2008, and bond yields rose on Monday as investors expected the earthquake and tsunami that devastated the country's northeast to take an economic toll and require heavy government borrowing.

The drop on record-high trading volume among the Tokyo Stock Exchange's biggest companies was compounded by fears about the long-term impact on power supplies after the earthquake damaged a nuclear generator. After an explosion on Monday, authorities were working desperately to avert a plant meltdown.

Fears of more aftershocks and further repercussions from the damaged nuclear power plant would probably continue to keep investors on edge and weigh on the market this week.

The yen also slid against the dollar on hedge fund selling after the Bank of Japan announced a total of 15 trillion yen in fund injections to keep money markets stable.

Japanese automakers, electronics firms and oil refiners saw their share prices drop by double digit percentages at one point after having to shut key factories after Friday's earthquake and tsunami, which are feared to have killed more than 10,000 people and severely damage infrastructure.

Shares of Tokyo Electric Power, Japan's biggest utility that owns a nuclear plant that may be close to meltdown, were a big focus for the market. TEPCO ended ask-only at 1,621 yen, down 23.6 percent.

Construction-related businesses rallied on the back of expectations for demand from rebuilding efforts, with Kajima jumping 22.2 percent and Taiheiyo Cement climbing 21.2 percent.

In the month after the earthquake in Kobe in January 1995, construction stocks outperformed the broader market consistently for a year after the disaster, Citi research showed.