- Tokyo stocks tumbled to 19-year lows on Wednesday, following
a sell-off in banking shares on new worries over the government's expected
measures to bail out the financial sector.
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- The Tokyo market fell despite a powerful rally on Wall
Street overnight, following news that Iraq had dropped most restrictions
on United Nations weapons inspections.
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- The benchmark Nikkei 225 average closed down 112.93 or
1.2 per cent at 9,049.33, its lowest level since August 1983. This compares
with September's 19-year low of 9,075.09. The broader Topix index closed
down 10.14, or 1.12 per cent, at 893.23.
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- Though the Tokyo market initially rallied following Wall
Street's movements, it fell into the red after Jiji news agency reported
that Takeshi Kimura, known as a pro-reformer, would be appointed a member
of the the government's taskforce to tackle banks' bad loans. Mr Kimura's
appointment added to the likelihood that the government would inject public
funds into the battered banking sector, following the appointment of Heizo
Takanaka as head of the Financial Services Agency.
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- "Kimura has been close to Takanaka, and he believes
that the government has to take tough measures to deal with banks' bad
loans," said Masatoshi Kikuchi, strategist at Merrill Lynch.
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- Though bank shares initially gained after Mr Takanaka
was appointed head of the FSA on Monday, but have pulled back over the
past two days as scepticism has set in regarding the government's plans
to recapitalise the banking sector. Such a move could dilute existing shares,
say analysts, and could lead to a de-facto nationalisation of banks. Analysts
also caution that the stocks are risky because both bank executives and
shareholders face pressure regarding their responsibility for the problems.
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- The sector closed down 2.2 per cent, with Mizuho Holdings,
the world's biggest bank by assets, down 4.5 per cent to Y254,000. Mitsubishi
Financial Group fell 2.8 per cent to Y859,00 and UFJ Holdings slid 5.3
per cent to Y269,000
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- NEC slipped 1.6 per cent to Y559 and chipmaker Advantest
fell 1.8 per cent at Y4,440.
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