Nikkei hits four-month closing low

Japan's Nikkei average ended down 0.7 percent on Tuesday, trimming losses but marking a four-month closing low as banking shares fell, though investors picked up beaten-down exporters such as Sony Corp. Although the benchmark briefly turned positive in afternoon trade, it hovered just short of a 26-year low amid worries about the US financial system that sent US stocks to 12-year lows on Monday, with insurer AIG posting a record loss.
Mitsubishi Corp and other trading houses slid after oil tumbled 10 percent on Monday, while Astellas Pharma dropped after saying it had scrapped a licensing agreement with a Neurosearch unit on a drug to treat schizophrenia.
"Worries that the Nikkei average will push further down haven't been wiped away," said Kazutaka Oshima, chief strategist at Rakuten Securities. "The United States seems to be experiencing a financial crisis once again, including AIG's situation, while the dismal economic conditions in Central and Eastern Europe could lead the euro to weaken against the yen," he said.
The benchmark Nikkei declined 50.43 points to 7,229.72, the lowest finish since October 27. It slid as low as 7,088.47 in the morning - a level not seen since the 26-year low of 6,994.90 recorded in late October. The broader Topix slipped 1.1 percent to 726.80, its lowest close since December 1983. Still, the market received support from buying on dips.
"The 7,000 mark for the Nikkei and 700 for the Topix are the levels at which investors start thinking stocks are undervalued, particularly considering companies' profitability in the mid to long term," said Junichi Misawa, a senior fund manager at STB Asset Management. "Also fortunately, despite dismal performances on Wall Street, the dollar hasn't weakened due to risk aversion, and that is helping out exporters' shares here."
Oil-linked shares slid after oil tumbled over 10 percent on Monday as the deepening global recession threatened to crimp energy demand further, outweighing Opec's strong compliance with supply curbs. Mitsubishi, Japan's largest trading house, lost 2.4 percent to 1,147 yen and Marubeni Corp dropped 4.4 percent to 285 yen. Oil and gas field developer Inpex lost 5.8 percent to 589,000 yen.
Astellas shed 1.9 percent to 3,100 yen. Banks fell, though they pared earlier losses, after embattled insurer AIG posted a record $61.7 billion loss, the biggest in US corporate history, and received another government bailout. Mitsubishi UFJ Financial Group, Japan's top lender, dipped 0.5 percent to 421 yen, after losing more than 4 percent in the morning. No 2 Mizuho Financial Group fell 2.8 percent to 176 yen.
Suzuki Motor Corp climbed 2.3 percent to 1,541 yen after Maruti Suzuki India Ltd, in which Suzuki owns 54.2 percent, increased sales by nearly a quarter in February from a year before, defying a broad downward trend in the industry.
Shares in Hitachi Construction and other machinery makers with strong China businesses gained on hopes that a new stimulus plan may emerge this week, market players said. Trade was moderate on the Tokyo exchange's first section, with 1.9 billion shares changing hands, compared with last week's daily average of 2.1 billion.