Tokyo's Nikkei stock average slid two percent on Tuesday, its biggest one-day loss in two months, as investors dumped Advantest Corp and other tech issues given a souring outlook for the U.S. Nasdaq.
A halt in the dollar's rise also prompted investors to lock in profits in auto and other exporters, which had posted handsome gains on Monday after the dollar hit a three-month high of about 109.40 yen.
"Yesterday, there were hopes that the weaker dollar trend was over. But the dollar appears to be merely stabilizing at the 108-109 yen level today, putting a damper on that optimism," said Nobuki Goto, general manager of investment research at Tokio Marine Asset Management.
The Nikkei average fell 224.83 points or 2.07 percent to 10,644.13, wiping out the previous day's 1.38 percent gain. It was the biggest percentage fall since December 16.
The broader TOPIX index lost 1.79 percent to 1,048.88.
Some analysts said the retreat seemed to be a minor blip in the current uptrend toward the start of the new fiscal year in April.
"Tokyo's trend has not changed yet, with the Nikkei average expected to be firmly supported at 11,500, which is near its 13-week and 26-week averages," said Kazunori Jinnai, general manager at the equity department of Daiwa Securities SMBC Co Ltd.
Among exporters, Toyota Motor Corp, Japan's biggest auto maker, lost 2.63 percent to 3,700 yen, erasing the previous day's 2.15 percent gain.
Semiconductor chip-testing device maker Advantest dropped 4.19 percent to 8,000 yen after the U.S. tech-laden Nasdaq shed 1.49 percent to 2,007.52 on Monday, breaking below its 50-day moving average.
The break of a key technical level, at which some market players had anticipated solid support, hurt investors' appetite for similar Japanese shares, analysts said.
"(The break below the technical level) cast a shadow over the Nasdaq's outlook," said Norihiro Fujito, senior investment strategist at Mitsubishi Securities.
"Investors, including foreigners, are avoiding shares that have a high correlation to the Nasdaq here, in particular, chip-related stocks such as Advantest and Tokyo Electron."
Chip-making equipment maker Tokyo Electron Ltd. slid 4.14 percent to 6,710 yen and electronics conglomerate NEC Corp skidded 3.58 percent to 780 yen.
Bullish earnings comments from Intel Corp, the world's largest computer chip company, failed to provide support.
Intel Chief Executive Craig Barrett said in an interview with Japanese business daily Nihon Keizai Shimbun published Tuesday that the company was targeting a 15 percent rise in revenues in 2004 compared with last year.
Volume dropped a notch, with 1.017 billion shares changing hands on the first section, the lowest total in two weeks.
Decliners outnumbered gainers 1,185 to 253.
DOCOMO ADDS LOSSES
NTT DoCoMo led declines in the telecoms sector on Tuesday due to worries that intensifying price competition in the mobile sector could hurt earnings.
DoCoMo, Japan's dominant mobile phone operator, plunged 5.17 percent to 220,000 yen, adding to a two percent fall in the previous session after it said on Saturday it would offer unlimited mobile phone data transmission for a flat fee, following a similar move by rival KDDI Corp
KDDI lost 2.48 percent to 550,000 yen.
Another notable loser was Sumitomo Realty & Development Co Ltd., which plunged 6.84 percent to 994.
The real estate developer said on Monday it would raise up to 74 billion yen ($683.5 million) by offering up to 69 million new shares, sparking oversupply concerns.
After the market closed, Yamanouchi Pharmaceutical Co said it would buy rival Fujisawa Pharmaceutical Co in a deal worth $7.76 billion, to be completed in April 2005.
The deal, which has been rumored for some time, will create the nation's number two drug maker after Takeda Chemical Industries Ltd. with annual sales of about 920 billion yen.
Prior to the announcement, Fujisawa rose 2.25 percent to 2,495 yen and Yamanouchi eased 1.64 percent to 3,590 yen.
"I think we can regard this marriage as a positive, given that an expansion of scale and improved global reach are becoming necessary to compete in the pharmaceutical industry," said Hajime Yagi, general manager at Meiji Dresdner Asset Management.
A halt in the dollar's rise also prompted investors to lock in profits in auto and other exporters, which had posted handsome gains on Monday after the dollar hit a three-month high of about 109.40 yen.
"Yesterday, there were hopes that the weaker dollar trend was over. But the dollar appears to be merely stabilizing at the 108-109 yen level today, putting a damper on that optimism," said Nobuki Goto, general manager of investment research at Tokio Marine Asset Management.
The Nikkei average fell 224.83 points or 2.07 percent to 10,644.13, wiping out the previous day's 1.38 percent gain. It was the biggest percentage fall since December 16.
The broader TOPIX index lost 1.79 percent to 1,048.88.
Some analysts said the retreat seemed to be a minor blip in the current uptrend toward the start of the new fiscal year in April.
"Tokyo's trend has not changed yet, with the Nikkei average expected to be firmly supported at 11,500, which is near its 13-week and 26-week averages," said Kazunori Jinnai, general manager at the equity department of Daiwa Securities SMBC Co Ltd.
Among exporters, Toyota Motor Corp, Japan's biggest auto maker, lost 2.63 percent to 3,700 yen, erasing the previous day's 2.15 percent gain.
Semiconductor chip-testing device maker Advantest dropped 4.19 percent to 8,000 yen after the U.S. tech-laden Nasdaq shed 1.49 percent to 2,007.52 on Monday, breaking below its 50-day moving average.
The break of a key technical level, at which some market players had anticipated solid support, hurt investors' appetite for similar Japanese shares, analysts said.
"(The break below the technical level) cast a shadow over the Nasdaq's outlook," said Norihiro Fujito, senior investment strategist at Mitsubishi Securities.
"Investors, including foreigners, are avoiding shares that have a high correlation to the Nasdaq here, in particular, chip-related stocks such as Advantest and Tokyo Electron."
Chip-making equipment maker Tokyo Electron Ltd. slid 4.14 percent to 6,710 yen and electronics conglomerate NEC Corp skidded 3.58 percent to 780 yen.
Bullish earnings comments from Intel Corp, the world's largest computer chip company, failed to provide support.
Intel Chief Executive Craig Barrett said in an interview with Japanese business daily Nihon Keizai Shimbun published Tuesday that the company was targeting a 15 percent rise in revenues in 2004 compared with last year.
Volume dropped a notch, with 1.017 billion shares changing hands on the first section, the lowest total in two weeks.
Decliners outnumbered gainers 1,185 to 253.
DOCOMO ADDS LOSSES
NTT DoCoMo led declines in the telecoms sector on Tuesday due to worries that intensifying price competition in the mobile sector could hurt earnings.
DoCoMo, Japan's dominant mobile phone operator, plunged 5.17 percent to 220,000 yen, adding to a two percent fall in the previous session after it said on Saturday it would offer unlimited mobile phone data transmission for a flat fee, following a similar move by rival KDDI Corp
KDDI lost 2.48 percent to 550,000 yen.
Another notable loser was Sumitomo Realty & Development Co Ltd., which plunged 6.84 percent to 994.
The real estate developer said on Monday it would raise up to 74 billion yen ($683.5 million) by offering up to 69 million new shares, sparking oversupply concerns.
After the market closed, Yamanouchi Pharmaceutical Co said it would buy rival Fujisawa Pharmaceutical Co in a deal worth $7.76 billion, to be completed in April 2005.
The deal, which has been rumored for some time, will create the nation's number two drug maker after Takeda Chemical Industries Ltd. with annual sales of about 920 billion yen.
Prior to the announcement, Fujisawa rose 2.25 percent to 2,495 yen and Yamanouchi eased 1.64 percent to 3,590 yen.
"I think we can regard this marriage as a positive, given that an expansion of scale and improved global reach are becoming necessary to compete in the pharmaceutical industry," said Hajime Yagi, general manager at Meiji Dresdner Asset Management.
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