Dollar Falls, Stocks Fall Moderately
TOKYO (AP) _ Stock prices declined moderately on the Tokyo Stock Exchange in morning trading Thursday while the dollar fell against the yen.
The Nikkei Stock Average of 225 issues fell 247.26 points, or 0.87 percent, ending the morning session at 28,261.88. Market watchers said the previous day’s huge gain contributed to the drop Thursday.
The dollar ended the early session down at 149.85 yen. It opened at 149.50 yen, down 0.50 yen from Wednesday’s close and ranged between 149.50 yen and 159.90 yen during morning trading.
In bond dealings, the yield of the benchmark No. 119 10-year Japanese government bonds rose to 7.970 percent from Wednesday’s close of 7.915 percent. Their price fell to 83.56 points from 83.80 points.
Meanwhile, oil prices continued to slide in Tokyo. Traders said the slide was inspired by the prospect of higher oil production by Saudi Arabia and other producers.
North Sea Brent crude oil for October delivery was offered at $23.90 a barrel, bid at $23.30, but no transactions were completed. The settlement price in New York was $23.90.
Thursday’s decline in the stock market index was a retreat from the previous day’s surge, which was ″too much considering the Mideast situation and rising interest rates here,″ said Masahiro Yagi, deputy director of the capital trading department at Sanwa Bank.
The Nikkei climbed 856.07 points Wednesday - its eighth largest gain ever - helped by bargain hunting following five consecutive losses since Iraq invaded Kuwait.
″It is rather natural for the index to plunge,″ Yagi said.
″Although many market players bought issues yesterday based on a belief that the Nikkei had hit bottom, it does not seem that way,″ he said. ″The Japanese stock market has been suffering from increasing interest rates, and that’s the fundamental problem.″ The Tokyo stock market, already vulnerable due to higher interest rates, has lost 4,348.01 points since July 20.
In the currency markets, dealers said the dollar’s weakness followed its overnight slip in New York, where the currency finished at 149.90 yen, down from 150.90 yen on Tuesday.
They said many market players stayed away as they awaited developments in the Middle East and financial markets in Singapore were closed for a holiday.
A dealer with a commercial bank in Tokyo, who spoke on condition of anonymity, said the dollar was weakening as investors started selling the currency, which they had overbought as a safe haven in the wake of the Iraqi invasion last week.
Kan Sugita, a dealer with the Bank of Tokyo, said the market did not show ″immediate″ reaction to U.S. President George Bush’s announcement Wednesday that he was sending U.S. troops to Saudi Arabia.
″People wanted to take a wait-and-see position to see whether there’s any military clash,″ Sugita said.