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Japanese shares close down on US concerns

TOKYO - Japanese share prices closed down 1.69 percent Wednesday on renewed concern about the US economy but the market pared early losses as the yen fell back from recent highs, dealers said.

The benchmark index ended just a notch above the symbolic 16,000-point level after slipping below it in early trade for the first time in a week.

Tokyo and other Asian markets fell earlier Wednesday on concern over a sharp drop on Wall Street, where investors were alarmed by bad news in the United States on consumer confidence and the beleaguered housing sector.

But as markets stabilised Wednesday, the yen fell back from a spike against the dollar. A weak yen benefits Japanese exporters by making their goods more competitive overseas and increasing repatriated earnings.

‘Some bargain hunting emerged in afternoon trade, which helped the Nikkei trim its earlier loss,’ said Fumiyuki Nakanishi, broker at SMBC Friend Securities.

‘The dollar’s recovery was also a factor behind that. But the pattern of Japanese shares carbon-copying Wall Street’s moves will continue for the time being,’ he said.

The Tokyo Stock Exchange’s key Nikkei-225 index ended down 274.66 points at 16,012.83.

The broader Topix index of all first-section shares was down 27.05 points or 1.71 percent at 1,557.55.

Declining shares overwhelmed gainers 1,490 to 166, with 58 issues unchanged.

Volume was again lighter than usual, with an estimated 1.69 billion shares traded, up from 1.33 billion on Tuesday, the lowest level this year. Typically, volumes run between 1.8 to 2.0 billion shares.

Many players have chosen to remain on the sidelines to monitor further developments in the US ‘subprime’ sector of loans to customers with patchy credit histories.