TOKYO: Tokyo stocks fell 0.60 percent Tuesday after a top European official suggested the Cyprus bailout, which includes an unpopular bank deposit levy, could be a template for future rescues.
The benchmark Nikkei 225 index was down 74.84 points at 12,471.62, while the Topix index of all first-section shares slipped 0.27 percent, or 2.87 points, to 1,044.42.
Tokyo took a lead from Wall Street and European markets which tumbled after Eurogroup head Jeroen Dijsselbloem said the Cyprus model of penalising bondholders, shareholders and uninsured deposit holders in bank failures could be applied elsewhere on the troubled continent.
Dijsselbloem subsequently released a statement via Twitter that characterised Cyprus as a "specific" case.
"Mr. Dijsselbloem later revised his comments, which will take some of the sting out of the fallout on equities prices," SMBC Nikko Securities general manager of equities Hiroichi Nishi told Dow Jones Newswires.
But there are also growing worries that Cyprus still faces possible panic when banks reopen, with lenders in other weak eurozone economies facing a similarly dire scenario.
Dijsselbloem's comments "greatly exacerbated the risk of deposit flight", National Australia Bank said in a note.
Nicosia reversed a decision to reopen some banks on Tuesday after world markets took fright at the implications of the Mediterranean island's 10-billion-euro bailout, which calls for a levy on certain bank deposits over 100,000 euros ($130,000).
Despite the fears, the embattled euro recovered in Tokyo trade, buying $1.2875 and 121.29 yen from $1.2853 and 120.96 yen late Monday in New York, and well up from the $1.2830 it hit in London, its lowest since November.
The dollar bought 94.17 yen in Tokyo from 94.10 yen, as investors look to a Bank of Japan meeting next week with speculation that a new management team at the central bank would launch more easing measures.
In Tokyo stock trading Sony was down 2.68 percent at 1,666 yen, Nissan slipped 1.90 percent to 927 yen, while Sharp was off 1.69 percent at 290 yen as investors awaited an announcement over a long-delayed investment in the troubled firm by Taiwan's Hon Hai Precision.
Olympus inched up 0.04 percent to 2,260 yen after Japanese prosecutors asked that the camera and medical equipment maker's former president be jailed for five years for his part in a $1.7 billion loss cover-up scandal. (AFP)
