Tokyo stocks dipped further below the 9,000 line on Friday, extending hefty losses sustained during the most volatile week since the March 11 earthquake as the yen's strength prompted foreigners to sell carmakers, pulling Toyota Motor to its lowest level this year.
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The Nikkei's loss took it 12 percent below its post-quake closing high, hit on July 8, after a spike in volatility across markets on rumours about the health of European banks, mounting questions about the stability of funding markets and authorities struggling to solve a crisis of confidence in Europe.
"It's a great shame, but during this week I had to completely overhaul my strategy for this year," said Takashi Aoki, a senior fund manager at Mizuho Asset Management, adding that Friday's losses were exacerbated by a fall in U.S. stock futures and position tweaking ahead of the weekend. "We were ready to take more risk on, betting on a rebound in corporate earnings and the post quake recovery, but now I'm taking a much more cautious stance." Other institutional investors took a similar approach, piling into domestic demand-related and defensive sectors such as pharmaceuticals and retailers, while dumping the likes of Honda Motor Corp , which was down 12 percent on the week, and Hitachi , which ended the week 7 percent lower.
The Nikkei lost 0.2 percent on Friday to end at 8,963.72, while the broader Topix fell 0.4 to 768.19. The Nikkei was down 3.6 percent on the week. The move away from yen-sensitive and globally exposed large-cap blue-chip exporters bolstered the most outstanding rally of the week, that of social networking service operator Gree Inc .
Gree rocketed up nearly 30 percent for the week in heavy turnover, hitting all-time highs time and again, after punchy earnings and a solid outlook at the beginning of the week prompted JPMorgan to hike the stock's rating to "buy".
On Friday it rose 4.5 percent to 2,283 yen. Gree's startling ascent contrasted with the fall of gaming giant Nintendo , which hit its lowest intra-day level since May 2004, closing down 4.6 percent at 10,900 yen a day after it started selling the Nintendo 3DS handheld game device with a much-reduced price tag in Japan.
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Some of the selling in exporters was offset by dip-buyers who chased the battered stocks of financials higher, reflecting a rebound in the sector on Wall Street. Dai-ichi Life Insurance added 2.2 percent to 93,000 yen, boosted by a hike in April-June core profit, and T&D Holdings advanced 0.3 percent to 1,624 yen.
Volumes ahead of the weekend eased from this week's highs, with 2.0 billion shares changing hands on the main board, in line with the last week's daily average A mild uptick in sentiment was apparent as players scooped up stocks of some energy-related companies such as Japan's largest oil and gas developer Inpex Corp , which gained 2.4 percent despite falls in prices of oil.
Market players said Friday's falls were limited as investor confidence was boosted after purchases of exchange-traded funds to the tune of 25.6 billion yen ($333 million) carried out by the Bank of Japan the day before and by hopes for a technical rebound next week.
The Nikkei's 14-day RSI, a measure of momentum that is used to indicate overbought or oversold conditions, was below 30 for the whole week -- the oversold threshold. That is the longest string of days below 30 since the depths of the financial crisis in late 2008.
"Investors confirmed that the bottom, even in these circumstances, lurks around 8,600 and we can probably say we touched the second post-quake low there," said Takashi Hiroki, chief strategist at Monex Securities, adding that further rises on the Tokyo market hinge on developments in Europe and the U.S.
Shares of Canon Inc jumped 5.6 percent to 3,590 yen after it said on Thursday it plans to buy back up to 1.2 percent of its outstanding shares, while Toyota Motor slipped 1.1 percent to 2,819 yen, its lowest level since Nov 1. Decliners outpaced advancing shares by a ratio of 5 to 4.