The Nikkei 225 index sank below the 10,000 level Monday morning for the first time since December on investors' fears that Friday's devastating earthquake will seriously hamper Japan's economic recovery.
The Nikkei 225 index sank below the 10,000 level Monday morning for the first time since December on investors' fears that Friday's devastating earthquake will seriously hamper Japan's economic recovery.
The Nikkei average began tumbling immediately after trading opened at 9 a.m. In afternoon trading, stock prices fell further after an explosion was reported at the No. 3 reactor of the Fukushima No. 1 nuclear power plant in Fukushima Prefecture around 11 a.m.
"All investors, including individual and foreign ones, are selling their shares. Market players have an extremely pessimistic view about the damages from the quake and the electricity shortage," said Tsuyoshi Kawata, senior strategist at Nikko Cordial Securities Inc.
The index closed at 9,620.49, down 633.94, or 6.18 percent, from Friday's close. The morning session closed at 9,789.55, down 464.88. The levels were the lowest since mid-November last year.
To curb the sharp fluctuations, the Tokyo Stock Exchange limited the range of price movement.
In the morning session, the prices of 273 stocks fell by the maximum allowable range set by the TSE.
Sell orders for shares of Tokyo Electric Power Co., operator of the troubled nuclear power plants in Fukushima Prefecture, far outnumbered buy orders, leading to a mismatch in trading.
Most of the stocks listed on the First Section of the TSE declined.
Almost every industry took a hit, including carmakers that suspended operations at factories in the Tohoku and Kanto regions, and nonlife insurers that will be forced to pay huge amounts of benefits because of the quake.
But share prices of major construction companies rose because of the expected surge in orders for reconstruction projects in areas devastated by the quake and tsunami.
The disaster also affected currency trading in Tokyo, with the early trend Monday of buying yen and selling dollars.
The yen temporarily rose to nearly 80.49 to the dollar around 7 a.m., the highest since November.
A view had spread that Japanese companies anxious about securing emergency funds would convert their foreign currency-denominated funds for overseas investment into yen.
But after the Bank of Japan announced in the morning that it would inject more than 10 trillion yen into the currency market, the yen retreated to just under 83.0 to the greenback.
The government indicated it would intervene if necessary.
"I want to pay close attention to the movements of the markets, such as those of stocks and government bonds. Now is the stage to pay attention," Finance Minister Yoshihiko Noda said.
Bond prices rose in Tokyo on Monday after investors shifted away from stocks and turned their attention to relatively safer government bonds.