TOKYO, September 6, 2011 (AFP) - Tokyo stocks closed at a more than two-year low Tuesday on rekindled worries over eurozone debt and the fragility of the global economy.
The benchmark Nikkei 225 index at the Tokyo Stock Exchange closed down 2.21 percent, falling 193.89 points to 8,590.57, its lowest level since April 28 2009, towards the end of the sharpest phase of the financial crisis.
The broader Topix index of all first-section issues was down 14.62 points or 1.93 percent at 741.20.
The Nikkei's plunge came as Asian bourses followed heavy losses in Europe on Monday with banks hit particularly hard by acute tension over the risk of recession in leading economies and over eurozone debt.
Bonds issued by Greece and Italy fell on Monday, and the cost of insuring against default by Italy and France rose sharply.
The yen rose to nearly a six-month high versus the euro in Tokyo trade Tuesday, hitting sentiment towards exporters exposed to the eurozone as concerns resurfaced about Greece's ability to manage its debt.
A strong yen erodes the repatriated profits of Japan's exporters and makes it harder for goods produced domestically to be cost competitive.
"The Greek debt problem is of utmost concern on most investors' minds," said Hideyuki Ishiguro, a strategist at a Japanese securities firm, noting the upcoming Greek sovereign debt rollover deadline.
"It's too scary to buy stocks before we find out how this will pan out," he told Dow Jones Newswires.
TDK fell 4.26 percent to 2,987 yen and Sony dropped 2.43 percent to 1,522.
Financial stocks also fell as their European counterparts sustained heavy losses on Monday. Nomura Holdings was down 5.51 percent at 291 yen, with Mitsubishi UFJ Financial Group down 2.69 percent at 325 yen.
As investors fled to the safe haven Japanese currency, the euro dropped below 108 yen for the first time since March 17, shortly after the massive earthquake and tsunami devastated eastern Japan on March 11.
The dollar was flat at 76.80 yen compared to 76.86 yen. The US markets were closed Monday for the Labor Day holiday.
Toshiba plunged 5.11 percent 297 yen Tuesday after the Wall Street Journal reported the firm is in talks to buy out Shaw Group's 20 percent stake in US nuclear power plant company Westinghouse Electric.
"The decision may have been viewed positively if it had been before the (Japan) nuclear accident," Toshiyuki Kanayama, a senior market analyst at Monex, said, referring to the crisis at the Fukushima plant hit by the March tsunami.
"But it's difficult to understand the need to increase its stake in Westinghouse now when domestic sentiment on the nuclear power business is sour," he said while recognising continuing demand in the US and emerging countries. Toshiba currently owns 67 percent of Westinghouse.