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Stocks

Sell-off in Japan spreads to domestic-demand shares

TOKYO -- Banks and other domestic-demand-related stocks got caught in broad selling Tuesday on the Tokyo market, where export and resource stocks fell sharply on a stronger yen and lower crude oil prices.

     Some 200 stocks fell to their lowest levels since the start of the year on the first section of the Tokyo Stock Exchange as selling accelerated amid growing risk aversion. This marked slightly more than triple the tally of Monday and was also the highest in roughly two months.

     Stocks sinking to year-to-date lows reached 1,023 on Feb. 12, when the Nikkei Stock Average fell under 15,000. But they had since numbered several dozen at the most until the end of March. The tally began rising as April rolled in and spiked Tuesday. The Nikkei average ended the day 2.42% lower at 15,732.

     Exporters constituted a high proportion of the losers, with bearings makers NSK and NTN temporarily dropping as far as 6%. Inpex and Japan Petroleum Exploration fell 4-6% at one point as resource shares, vulnerable to cheap crude oil, were sold.

     But the banking sector had the most stocks hitting year-to-date lows. Such regional players as Shizuoka Bank, Bank of Kyoto and Hiroshima Bank had a major presence in the group. Shizuoka Bank ended the day around 3.9% lower, underperforming the Nikkei average.

     Other domestic-demand-driven shares, including retailers and land transportation companies, also sustained selling. Department store operator Takashimaya; Central Japan Railway, or JR Tokai; and Sumitomo Forestry were among those hitting lows for the year.

     "Selling of Japanese stocks swelled irrespective of industry as foreign investors became more risk averse due to weak oil prices and other factors," said Tomohiro Okawa, equity strategist at UBS Securities Japan.

     The TSE's first section suffered selling across the board, with 97% of the stocks ending Tuesday lower. Facing such overwhelming selling pressure, even individual investors, who often show a strong contrarian streak, "had to remain on the sidelines," said Masato Futoi, group leader at Tokai Tokyo Securities.

     With the Nikkei average having declined roughly 3,300 points since the end of last year, Japanese equities should be more ripe for a rebound than U.S. shares, for example.

     But "it is difficult to start buying Japanese stocks aggressively until the yen's appreciation and low oil prices run their course," said Kiyoshi Yamanaka, an executive at T&D Asset Management.

(Nikkei)

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