The Nikkei stock average fell 2.5 percent for its third straight day of declines, hurt by US recession fears and an earthquake that rattled north-east Japan in late trade, but the benchmark managed to hold above lows marked earlier this month. Asian investors unloaded Nikkei futures after the quake hit 20 minutes before the close, market participants said, although it pared some losses after there were no reports of major damage.
Many are looking ahead to next Friday when Federal Reserve Chairman Ben Bernanke speaks at the central bank's annual gathering in Jackson Hole, Wyoming. "Potential measures by the Japanese government are limited as current weakness in the market is due mainly to worries about overseas markets. Investors' main focus is whether the Fed will drop any hints about further monetary easing measures," said Takahide Kiuchi, chief economist at Nomura Securities.
The benchmark Nikkei ended at 8,719.24 after dropping as low as 8,707.47 but held above an August 9 low of 8,656. For the week, the Nikkei shed 2.7 percent. The broader Topix index fell 2.0 percent to 751.69. Chartwise, after the August 9 low, a key downside level for the Nikkei is the March 15 closing low of 8,605.15 marked after the March 11 earthquake and tsunami. A break would set it up for a test of 8,500, said Yutaka Miura, senior technical analyst at Mizuho Securities.
Despite the late-session burst of activity after the quake, volume was thin on Friday, with 2.0 billion shares changing hands on the Tokyo Stock Exchange's main board, below last week's daily average of 2.4 billion shares. Major automakers hit new year-to-date lows on the US recession fears, with Honda Motor falling 3.3 percent to 2,403 yen and Toyota Motor shedding 1.4 percent to 2,768 yen.
Oil-related shares were weaker, with Inpex tumbling 4.7 percent to 475,000 yen and Japan Petroleum Exploration losing 5.2 percent to 3,095 yen, after US crude futures fell more than $1 a barrel early on Friday on the raft of weak US economic data. Shares of Nikon and other Japanese chipmaking equipment manufacturers slid following weak North American orders data and a 5.9 percent drop in the Philadelphia semiconductor index, reflecting worries about the outlook for global tech demand.
Nikon dropped 5.9 percent to 1,610 yen, Tokyo Electron shed 5 percent to 3,400 yen and Advantest Corp fell 4.8 percent to 1,018 yen. Don Quijote Co rose 2.6 percent to 2,799 yen after the discount retailer said its operating profit for the year ended June 30 rose 20 percent and forecast a 6.6 percent rise for the current year.