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Tokyo stocks tumble after European elections

07 may 2012, 12:21
0
©AFP
©AFP
Tokyo stocks tumbled 2.62 percent in morning trade on Monday amid investor worries over the defeat of ruling parties in French and Greek elections, and following a slide on Wall Street, AFP reports.

The Nikkei 225 index at the Tokyo Stock Exchange ended the morning session down 245.99 points at 9,134.26 after falling nearly 3.0 percent in the first few minutes of trading.

The Topix index of all first section shares fell 2.51 percent or 19.92 points to 772.95.

The yen meanwhile rose to its highest level since mid-February against the euro as markets fretted about the poll results having a knock-on effect on European austerity measures.

"The biggest factor is going to be the stronger yen. Investors were hoping for the triumph of more austerity-friendly governments in both France and Greece," said Tsutomu Yamada, a market analyst at kabu.com Securities.

The euro bought 103.62 yen in Tokyo morning trade after falling to 103.22 yen earlier Monday, the single currency's lowest level since mid-February and sharply down from 104.50 yen in New York late Friday.

Against the dollar, the euro briefly fell to its lowest level in more than three months before recovering to $1.2981, still down from $1.3082 on Friday in New York.

In France, Socialist leader Francois Hollande became president-elect, after incumbent Nicolas Sarkozy conceded defeat.

Analysts said Hollande's victory underscored the politically difficult task of selling austerity measures designed to tackle eurozone nations' huge debts, with Hollande advocating economic growth over deep public spending cuts.

Greek voters showed their lack of enthusiasm for belt tightening, dousing hopes that Athens will stick to its austerity pledges as parties opposing more cuts won almost 60.0 percent support in a general election Sunday.

The two main parties suffered heavy losses, with the conservative New Democracy and the left-wing Pasok getting just 32.0 to 34.5 percent between them, down from 77.4 percent at the last polls in 2009.

New Democracy, led by Antonis Samaras, remained the largest party but it fell short of an absolute majority in parliament.

The Tokyo market was also weighed down by mostly disappointing US economic data last week.

The Dow Jones Industrial Average fell 1.27 percent to 13,038.27 on Friday after data showed the world's biggest economy generated only 115,000 net new jobs last month, less than half the pace at the beginning of the year.

Meanwhile, the Institute for Supply Management's services index fell to 53.5 from 56.0, showing the US services sector continued to expand, but only sluggishly. Anything below 50 indicates contraction.

Companies surveyed told the ISM that business was better than last year but that expansion had slowed, with some citing the effect of higher oil prices.

-- Dow Jones Newswires contributed to this article --

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