Nikkei tumbles 5 pct to near 4-month low on Wall Street selloff

  • Reuters
  • Stock Market News
Nikkei tumbles 5 pct to near 4-month low on Wall Street selloff
Credit: © Reuters.

* Immediate support seen at 200-day moving average of 20,938 - analyst

* BOJ buys 73.1 bln yen worth of ETFs on Monday

By Ayai Tomisawa

TOKYO, Feb 6 (Reuters) - Japan's Nikkei share average tumbled 5 percent to hit a near four-month low on Tuesday morning after Wall Street posted its worst decline in four years on fears about rising U.S. bond yields and potentially rising inflation.

The Nikkei .N225 was trading down 5.3 percent at 21,490.63 in midmorning trade, the lowest level since Oct. 20.

The S&P 500 and Dow Industrials indices slumped more than 4 percent overnight, as the Dow notched its biggest ever intraday drop, down nearly 1,600-points. The declines for the Dow and the benchmark S&P 500 index were the biggest single-day percentage drops since August 2011.

The rout reverberated through the Japanese market, which hit a 26-year peak last month, buoyed by last year's re-election of Prime Minister Shinzo Abe, firm global growth and strong earnings expectations by local companies.

"Investors are now unwinding their risk positions," said Takuya Takahashi, strategist at Daiwa Securities. "People are pulling out of risk assets now and at this point we don't know if this is temporary or not."

Takahashi added that the Nikkei's immediate support is seen at its 200-day moving average of 20,938.

All of the Topix's .TOPX 33 subsectors were in the red, with insurance and exporter stocks, such as machinery and electric component makers, among the worst hit.

Insurer T&D Holdings 8795.T stumbled 7 percent and Dai-ichi Life Holdings 8750.T nosedived 7.4 percent.

Furukawa Electric 5801.T declined 6.2 percent, Yokogawa Electric 6841.T dropped 6.3 percent and Sumitomo Electric Industries 5802.T fell 6.2 percent.

Bellwether companies also lost ground. Toyota Motor Corp 7203.T shed 3.7 percent, Honda Motor Co 7267.T fell 4.4 percent, Sony Corp 6758.T slipped 4.2 percent and Nintendo Co 7974.T tumbled 5.2 percent.

Market participants expect that the Bank Of Japan will buy exchange-traded funds on Tuesday to support the market.

The BOJ bought 73.1 billion yen ($672 million) of ETFs on Monday.

The broader Topix .TOPX dropped 4.6 percent to 1,740.32. ($1 = 108.8400 yen)

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