TOKYO: Tokyo stocks tumbled 2.96 percent on Monday after official data showed Japan's economy slumped into a recession, dealing a blow to Prime Minister Shinzo Abe's revitalisation plans.
The Nikkei 225 index at the Tokyo Stock Exchange, which closed at its highest level in more than seven years on Friday, dropped 517.03 points to finish at 16,973.80, while the broader Topix index of all first-section shares fell 2.45 percent, or 34.28 points, tot 1,366.13.
"The numbers really disappointed," said Investrust chief executive Hiroyuki Fukunaga.
"The selling appears to be a mix of utter frustration at the government's handling of the economy and moves by hedge funds employing a 'sell-on-the-news' strategy that may have been in place regardless of the GDP data."
The world's number three economy shrank 0.4 percent in the July-September quarter, or an annualised rate of 1.6 percent, marking the second straight quarter of contraction.
"The headline figure was just shockingly bad for the markets," Takashi Hiratsuka, a trading group leader at the asset management division of Resona Bank, told Dow Jones Newswires
The result makes it almost inevitable that Abe will delay a sales tax hike due next October and call snap elections for next month.
The economy had expanded in the first three months of the year, but an April 1 increase in Japan's sales tax -- aimed at paying off a huge national debt -- hammered consumer spending and slammed the brakes on a nascent recovery.
Last month, the Bank of Japan moved to kickstart growth again by expanding its already vast monetary easing programme -- sending the Nikkei stock index surging and yen plunging -- but the latest data will lead to speculation of further measures.
Monday's news briefly sent the dollar above 117 yen before it eased to 115.70 yen, well below 116.26 yen in New York Friday afternoon.
In share trading, Toyota dropped 2.06 percent to close at 6,825.0 yen, Sony tumbled 3.01 percent to 2,329.0 yen, while market heavyweight Fast Retailing, operator of the Uniqlo clothing chain, plunged 3.59 percent to 42,615.0 yen.
But Toray jumped 4.14 percent to 842.1 yen after it announced an agreement to supply carbon fibre materials for Boeing's new 777X jet and the Dreamliner in a 10-year deal worth more than one trillion yen. (AFP)
