Japan's Nikkei average hit a 15-month closing low below 9,000 points today, with hedge funds and foreigners seen selling amid mounting concern about the authorities' inaction on a strong yen, which threatens a fragile economic recovery.
Market players said the close below the keenly-watched 9,000 level would likely feed downward momentum, with few technical targets to break the benchmark's fall.
Market disappointment remained keen after prime minister Naoto Kan and Bank of Japan governor Masaaki Shirakawa only spoke over the phone yesterday, foregoing a long-expected meeting, with no concrete action to counter yen strength that could hobble Japan's export sector and hit the economy.
The benchmark Nikkei shed 1.3 per cent or 121.55 points to 8,995.14, its lowest close since May 2009, after earlier falling as far as 8,983.52. The broader Topix lost 0.9 per cent to 817.73.
Market players said foreign investors and hedge funds were sellers, but that much of the day's slide was powered by individual investors losing heart and dumping shares.
A few said there appeared to be some light buying by pension funds at the lows and that some other investors could be bargain-hunting, but they added that most players were reluctant to take on the necessary risk.
So far this year, the Nikkei has been one of the world's worst-performing markets, which analysts largely blame on the yen's advance and its impact on exporters.
The MSCI Japan index is down roughly 10.4 per cent so far this year, while the MSCI All-Country World Index has shed 5.9 per cent in the same period.
By contrast, the MSCI index of Asia Pacific stocks outside Japan has fallen just 2.8 per cent.
Among the Nikkei's broad selling, exporters in particular lost ground, with Sony Corp falling 3.7 per cent to 2,406 yen, Canon Inc sliding 0.9 per cent to 3,520 yen and Tokyo Electron shedding 3.8 per cent to 4,100 yen.
Nomura Real Estate Holdings fell 6.3 per cent to 1,119 yen after Credit Suisse cut its rating on the company to "underperform" from "neutral", citing the potential risk of valuation losses and uncertainty about the level of those losses.
But defensive stocks such as drugmakers, seen as resilient in the face of turbulent conditions overseas, bucked a slide in the overall market as exporters fell due to worries about the yen's strength.
Eisai Co gained 1.5 per cent to 3,055 yen and Daiichi Sankyo Co climbed 2.4 per cent to 1,678 yen. Cosmetics firm Shiseido Co added 0.4 per cent to 1,875 yen.
Trade was thin on the Tokyo exchange's first section, with 1.5 billion shares changing hands, a day after booking volume of 1.28 billion yen, a two-week low.
Declining stocks outnumbered advancing ones by more than 2 to 1.
Reuters