Nikkei Stock Average Tumbles 2 Percent

August 19 00:00 2011

New York, August 19 ( – Fear of US recession and concerns regarding the state of European banks have fueled the downfall of Nikkei stock average by more than 2 percent on Friday. This is the third successive day of the decline of Japanese stocks but they have not been hit as hard as when they were smothered by US debt woes earlier this month. Analysts feel that active buying is likely to pick up only after next Friday when US Federal Reserve Chairman Ben Bernanke makes a speech in Jackson Hole, Wyoming.

Benchmark Nikkei dropped as low as 8,734.96 but at midday break it had recovered to 8,751. 67. The broader Topix index hit a low of 752.81 after losing 1.9 percent. Concerns about the US economy were heightened with the news that manufacturing in US Mid-Atlantic region declined to a 2-½ year low in August and home resales slumped last month. Economic growth in US is not likely to recover soon as the business activity index of Philadelphia Federal Reserve Bank has fallen to minus 30.7 in August.

Investors are now focusing on the results of the US GDP that will be out next week. The drop in Nikkei is also attributed to the decline in stocks of automakers like Honda Motor and Toyota Motor that have fallen by 3.0 percent to 2,412 and by 1.8 percent to 2,758 respectively. Oil related shares, shares of Nikon Corp and other Japanese chip making equipment makers have also fallen, pulling down the Nikkei stock average.