TOKYO — Japanese stocks fell over 3 percent on Monday as the dollar extended losses against the yen and the acquisition of Bear Stearnsby JPMorgan Chaseunderscored the severe problems plaguing the US financial system.
The slide in stocks also came despite the announcement of a Federal Reserve discount rate cut.
JPMorgan Chase & Co said it would buy Bear Stearns for just $2 a share, in a deal under which the Federal Reserve will provide special funding.
After an initial bounce, the dollar fell below 98 yen , knocking exporters such as Toyota Motor Corp lower. “It’s the strong yen. Period. End of story,” said Masayoshi Okamoto, head of dealing at Jujiya Securities.
“Yes, Bear Stearns has been bought, but at $2 dollar a share, just a fraction of its price last week. Whatever happens to Bear Stearns, whatever the Fed does, for the Japanese stock market it’s really just the stronger yen.”
At 0031 GMT the benchmark Nikkei was down 3.1 percent at 11,860.48, below 12,000 for the first time since August 2005. The broader TOPIX was down 3.5 percent at 1,151.86.
Hitachi Ltd tumbled 8.1 percent to 624 yen after it said it would post its second straight annual net loss, hit by poor TV sales and a tax write-down, and added that a strong yen would make a tough 2008 even worse.
Toyota was down 3.5 percent at 4,910 yen and Honda Motor Corp fell 3 percent to 2,725.
(Agencies)