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TOKYO : Tokyo shares plunged 3.55 percent Tuesday, hitting a fresh 16-month low as worries over a persistently strong yen hit exporters, brokers said.
The headline Nikkei index at the Tokyo Stock Exchange dropped 325.20 points to 8,824.06, its lowest close since April 2009.
The Topix index of all first-section shares fell 2.96 percent, or 24.54 points, to 804.67.
The heavy losses wiped out Monday's gains made before the Bank of Japan announced an expansion of its monetary easing programme and the government gave a broad outline of its fresh stimulus plans.
On Tuesday the yen surged to 84.05 to the dollar, up from 85.36 yen Monday afternoon shortly after the BoJ announcement on its actions aimed at lowering the value of the Japanese currency.
"Japan is giving investors the impression that it's running out of options to counter market weakness," Kenichi Hirano, strategist at Tachibana Securities, told Dow Jones Newswires.
Japanese authorities have attempted, but failed, to contain the yen's steady appreciation, which hurts exporters by making their products relatively more expensive overseas while making imports cheaper, fuelling deflation.
A strong yen also reduces the value of overseas earnings of Japanese firms when repatriated into the Japanese unit.
A sell-off in exporters' shares may continue through autumn until the US economy shows some signs of recovery, said Masayoshi Yano, senior market analyst at Meiwa Securities.
"The biggest cause behind the yen's rise continues to be the slowdown of the US economy," Yano said.
Market players may pressure Japanese financial authorities to step into the forex market to sell down the yen, even without help from other major countries, dealers said.
Many analysts however consider the prospect of unilateral intervention to be ineffective.
Asian bourses, including Tokyo, faced heavy selling pressure from nagging slowdown fears in the US economy, which pushed US shares 1.39 percent lower Monday.
Japanese exporters dropped. Electronics giant Sony fell 3.66 percent to 2,368 yen and leading automaker Toyota Motor lost 2.38 percent to 2,860.
Engineering firm Toshiba dropped 4.35 percent to 395. Machinery maker Fanuc dropped 4.65 percent.
- AFP /ls
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