The Telegraph
Since 1st March, 1999
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Asia agonises, Europe sees ray of hope

Singapore, Sept. 4 (Reuters): Japanese stocks tumbled to 19-year lows, leading most Asian markets lower on Tuesday, as investors awaited key US manufacturing data when Wall Street returns to business after the Labour Day holiday.

The skidding Tokyo market sparked concerns about a possible sell-off in the global equities market, which undermined the dollar.

But forex dealers were mostly focused on US numbers due out this week, including the August jobs report, for hints on the health of the US economy. Tokyo’s Nikkei share average plunged 3.2 per cent to 9,217.04, its lowest close since September 19, 1983.

Technology stocks and exporters were sold as concerns mounted over the outlook for the Japanese and US economies. Banks, encumbered with heavy stock holdings, were also dumped. “It was only a matter of time until we fell this low,” said Masanori Hoshina, head of global portfolio market at BNP Paribas.

“Part of our weakness lies in concerns about the cloudy economic outlook in the US. But the key problem is that there are still no signs of a sustainable economic recovery in Japan.”

The dollar at 0630 GMT was trading around 117.86 yen and the euro was at $ 0.9866 cents, stuck in narrow trading ranges, as participants await the US manufacturing index for August, due out at 1400 GMT.

In contrast to the gloom across Asia, European shares crept higher by Wednesday noon, as bargain hunters swept in to pick up shares near one-month lows because fears of a double-dip recession looked overdone and US futures signalled gains on Wall Street.

By 1053 GMT, the FTSE Eurotop 300 index of pan-European blue chips was up 0.31 per cent while the narrower DJ Euro Stoxx 50 index jumped 0.13 per cent.

Markets wobbled around 0945 GMT as a large basket sell trade hit the market, particularly affecting Germany, traders said. However, most investors remained cautious as stock markets became increasingly volatile and a hoped-for recovery in corporate profits looked an ever more distant prospect.

Sectors less sensitive to the vagaries of the economy, such as health care and food/beverages, were still in demand despite recent heavy demand which has pushed up prices.

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