Tokyo stocks fell Tuesday as oil-linked firms took a beating after the price of crude tumbled to near a seven-year low. The precipitous drop was in reaction to a decision last week by the Organisation of the Petroleum Exporting Countries (Opec) not to cut output despite a global supply glut. "The full implications of Opec's failure to cut production have been coming to bear on the oil price and energy stocks," IG Ltd market analyst Angus Nicholson wrote in a client note.
"The dramatic selloff in the energy sector seen in the S&P 500 overnight seems to have crystallised concern over the future of the energy market," he added. Tokyo's fall came after a drop on Wall Street where energy shares took a beating, with the Dow and S&P 500 both losing 0.7 percent and the Nasdaq down 0.8 percent. In Tuesday trading, Japanese energy explorer Inpex plunged 5.01 percent to 1,164.5 yen, while JX Holdings, one of the country's biggest oil refiners, closed down 3.74 percent at 498.2 yen.
The Nikkei 225 at the Tokyo Stock Exchange dropped 1.04 percent, or 205.55 points, to finish at 19,492.60, while the broader Topix index of all first-section shares finished down 1.04 percent, or 16.48 points, at 1,568.73. Better-than-expected Japanese economic growth data, published shortly before markets opened, appeared to have little impact on investors. The world's number three economy grew 0.3 percent in the July-September quarter, according to revised figures, just weeks after initial estimates showed that it had fallen into recession, denting Prime Minister Shinzo Abe's growth blitz.
However, economists were cautious as consumer spending remained weak with little in the way of big wage hikes to put more money in people's pockets. "The data confirmed that the Japanese economy is growing gradually," said Hideo Kumano, chief economist at Dai-ichi Life Research Institute. "And while severe pessimism is receding, consumption - a key driver for the economy - is still weak. Without more spending and higher wages, the engine of the economy won't be ignited."
Toyota shares fell 1.33 percent to 7,601 yen, banking giant Mitsubishi UFJ finished down 0.94 percent at 796 yen and mobile carrier SoftBank slipped 0.73 percent to 6,322 yen. Sony dropped 1.62 percent to 3,078 yen, as a pickup in the Japanese currency hit exporters. The dollar weakened to 123.10 yen from 123.36 yen Monday in New York, while the euro slipped to 133.63 yen from 133.67 yen. The common currency fetched $1.0856, up from $1.0835 in US trade.
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