Japan shares see biggest daily drop in 6 weeks as yen firms on Fed view
SYDNEY, June 11 (Reuters) - Japanese shares suffered their biggest one-day fall in six weeks on Thursday as the safe-haven yen strengthened after the U.S. Federal Reserve's dour economic outlook spooked investors.
The benchmark Nikkei average .N225 plunged 2.8% to 22,472.91, its largest daily decline since May 1, moving further away from a 3-1/2-month closing high hit earlier in the week.
"The Nikkei's recent rapid rise to the 23,000-mark was not driven by inflows from real money investors. So when short-covering is done, a correction was inevitable," said Soichiro Matsumoto, chief investment officer Japan at Credit Suisse (SIX: CSGN ).
Fed on Wednesday signalled that it plans years of extraordinary support for the U.S. economy facing a pandemic-induced recession. Fed Chair Jerome Powell said he was "not even thinking about thinking about raising rates" and that policy would have to be proactive with rates near zero out to 2022. pressured rate-sensitive financial stocks. Dai-ichi Life Holdings 8750.T tumbled 6.8%, while Mitsubishi UFJ Financial Group (MUFG) 8306.T dropped 4.9%.
In the currency market, the risk of more easing kept the U.S. dollar under pressure, seeing it skid to a one-month low versus the safe-haven yen to trade at 106.90 yen JPY=EBS .
As a firmer yen hurts Japanese manufacturers' profits made abroad when repatriated, shares of export-oriented automakers came under pressure, with Nissan Motor 7201.T diving 8.8% and Mazda Motor 7261.T shedding 6%.
The broader Topix .TOPX lost 2.2% to 1,588.92, also posting its biggest one-day drop, with all but one of the 33 sector sub-indexes on the Tokyo exchange finishing lower.
Highly cyclical sea transport .ISHIP.T , air transport .IAIRL.T and mining .IMING.T were the three worst performing sectors on the main bourse.
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