German bond auction 'disaster' rocks markets
The Nikkei average fell more than 1 percent to its lowest level since April 2009 on Thursday, hurt by a worrying German bond sale and expectations that mounting European debt concerns will continue to push overseas equities markets lower.
But strategists say that Tokyo's fall is being tempered by expectations of buying by public pension funds, as well as the Bank of Japan's exchange-traded fund (ETF) purchases which are part of the central bank's liquidity-boosting program.
"There are no reasons to be optimistic, but there is reason to expect the BOJ and public pension fund buying, so the downside is supported for now," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley.
Germany suffered one of its least successful debt auctions for new 10-year debt since the euro was launched in 1999, sparking fears the debt crisis was even beginning to threaten the country on rising expectations it will have to bail out Europe's weaker nations.
Europe's woes helped send Wall Street to its sixth straight losing day on Wednesday, ahead of the U.S. Thanksgiving holiday. Tokyo markets were closed for a holiday on Wednesday and were catching up to the losses overseas.
The Nikkei dropped 1.4 percent to 8,198.51, while the broader Topix index slipped 1 percent to 710.82.
The Nikkei opened below 8,227.63, the two-and-a-half-year intraday low hit on March 15 in the wake of the earthquake and tsunami four days before.
Strategists said support lies at 8,150, the level at which Nikkei futures closed in Chicago.
About 680 million shares changed hands on the main board, and the day's volume looked on track to fall below Tuesday's full-day total of 1.51 billion and last week's average of 1.39 billion shares.
Komatsu fell 3.8 percent and Fanuc Corp shed 3 percent. The construction equipment maker and industrial robot maker both garner significant sales in China, and dropped after preliminary data showed China's factory sector shrank the most in 32 months in November.
Shares of Olympus Corp jumped 11.5 percent in heavy trading, up for the third day, as calls mount for the scandal-hit camera and endoscope maker to remain listed.
Big stockholders, a major governance advocacy group and ousted CEO Michael Woodford have all called for the Olympus not to be delisted. Olympus has also said it will meet a Dec. 14 deadline for filing its financial statements for the six-months to September.
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