Tokyo shares close sharply lower on high-techs, politics; Nikkei below 12,000

TOKYO (AFX-ASIA) - Share prices closed sharply lower, but off their lows for the day, with heavy selling led by high-tech stocks following the sharp fall on NASDAQ overnight, dealers said. The Nikkei 225 index fell to its lowest closing level since January 28, 1999, when it hit 11,798.86. Dealers said renewed uncertainty over the U.S. economy emerged following recent profit warnings and negative comment from high-tech and telecoms firms such as Ericsson and Cisco Systems. They added that political concerns dragged down overall sentiment in Japanese equities after comments by Prime Minister Yoshiro Mori created uncertainty over whether he plans to resign. The Nikkei 225 index closed down 351.67 points, or 2.89 pct at 11,819.70, off a low of 11,710.33 and a high of 12,044.78. Volume was an estimated 772 mln shares. The Topix was down 35.40 points at 1,170.58. The Nikkei 300 finished 6.61 points lower at 238.83. The Nikkei June futures contract was down 370 points at 11,780 on the Osaka exchange and at 11,770 on the SGX. There were 1,208 decliners and 181 gainers, with 77 stocks unchanged. "The Nikkei 225 fell below the 12,000 level so easily," Commerzbank strategist Hitoshi Ichio said. He said he does not expect the index to fall below 11,500 for the time being due to an expectedtechnical rebound. Despite this, the outlook for equities appears to be worsening as Japanese banks will start to sell more assets, including stocks, from April in an effort to cut their bad debts ahead of accounting changes in September, he added. "Japanese banks may start selling off their assets one after another," Ichio said. "Without political stability, this selling cannot be controlled." Political uncertainty has been the main driver of current declines in the stockmarket, even with the falls in the U.S. "The market is saying 'no' to the current political situation," he said. "Japan definitely needs political restructuring. The current political situation is as if there was no prime minister." Ichio added that politicians have been using the Bank of Japan as a scapegoat for the current economiccircumstances. "The BoJ is conducting a monetary easing policy that supplies plenty of capital into the financial market," he said. Ichio said he does not expect any major positive impact on equities even if the Bank of Japan decides to return to its zero-rate policy at the next board meeting on Monday. "The amount of capital the BoJ is injecting into the financial market is greater than during the Y2K problem," he said. "The difficulty is there are not any risk-takers. All the capital is flooding into the bond market." Among high-techs, Fujitsu fell 67 to 1,420 yen, while NEC shed 105 to 1,550, with Toshiba down 26 at 630 and Mitsubishi Electric off 41 at 613. Rohm lost 350 to 17,800, with Advantest declining 710 to 10,640 and TDK off 270 at 7,210. Internet-stocks were broadly lower after Amazon.com said individual investors should not invest in volatile internet stocks. Yahoo Japan fell 640,000 to 5.02 mln yen, with its major shareholder, Softbank shedding 280 to 4,180 and InterQ off 140 at 1,330. Among banks, Mizuho fell 20,000 to 665,000, with Bank of Tokyo Mitsubishi sliding 40 to 1,129 and Sumitomo Bank down 50 at 1,053.

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