Japan's Nikkei average dipped 0.4 per cent today to a fresh 26-year closing low as drugmakers slid amid worries about their global competitiveness after Merck proposed to take over Schering-Plough.
The Nikkei has lost about a fifth of its value this year as a deepening deepening global recession takes a heavy toll on the export-driven Japanese economy.
But losses were limited on Tuesday as expectations for the government to step into the market in what are often called price keeping operations or PKOs lent support.
Market participants say buying by what they believe to be public pension funds has been supporting the benchmark when it approaches 7,000.
Foreign investors have been heavy sellers of Japanese stocks, in part due to needs to repatriate funds as economic conditions deteriorate in their home markets.
Data last week showed foreigners sold a net 156.9 billion yen ($1.6 billion) of Japanese stocks during the week ended February 28th, their thirteenth consecutive week as net sellers.
The benchmark Nikkei shed 31.05 points in light trade to 7,054.98, a new 26-year closing low and expectations are high that it may soon break below 6,994.90 --a 26-year intraday low hit in October.
Although the market has been creeping towards the key level, technical charts show the Nikkei's downward momentum is not as strong as when the index fell in October.
The broader Topix declined 1 per cent to 703.50, a new 25-year closing low.
Shares of drugmakers dropped after Merck's proposed a $41 billion takeover of Schering-Plough.
Astellas Pharma shares sank 5.3 per cent to 2,860 yen and Chugai Pharmaceutical dropped 5.9 per cent to 1,552 yen.
Takeda Pharmaceutical, Japan's biggest drugmaker, extended losses after the stock dived 13 per cent yesterday on fears the replacement for its best-selling diabetes drug could be delayed by years in the United States.
Takeda shed 3.9 per cent to 3,190 yen.
But some high-tech exporters rebounded after being sold off in recent days, with Kyocera climbing 2.6 per cent to 5,580 yen.
Banks also gained ground. Top lender Mitsubishi UFJ Financial Group added 3.7 per cent to 395 yen and Sumitomo Mitsui Financial Group climbed 1.7 per cent to 2,690 yen.
Some 1.72 billion shares changed hands on the Tokyo Exchange's first section compared with last week's daily average of 2.04 billion. Declining shares outnumbered advancing one by more than 3 to 1.
Reuters