Japan stocks fall for seventh day amid global sell-off

Japanese stocks fell for the seventh straight session as fresh fears over the health of the world economy sparked a global sell-off.

The Nikkei 225 index shed 0.8%. Elsewhere, Hong Kong's Hang Seng and Australia's ASX 200 also dropped 1%.

Worries over the eurozone debt crisis and the US economic recovery losing its steam hit shares of exporters.

Sony fell 5%, a day after after it doubled its forecast of an annual loss to $6.4bn (£4bn).

"Japan's consumer electronics industry is facing defeat," said Fujio Ando, senior managing director of Chibagin Asset Management.

"I don't think there is any guarantee that we will see the company return to black this year." he said.

'Carbon copy'

Continue reading the main story

“Start Quote

2012 is at risk of being a carbon copy of 2011, where equity markets began the year with a spring in their step before sentiment turned very bearish as the European sovereign debt crisis spiralled out of control”

Angus Campbell Capital Spreads

One of the biggest fears among the global investors has been that the eurozone debt crisis, which has hurt growth countries such as Greece, may spread to the region's bigger economies.

Those fears were fanned further on Tuesday after the interest rate on Spanish bonds traded in the secondary market rose further.

The yield on 10-year bonds hit 5.99%, up from 5.74% on Monday, indicating that investors are getting increasingly concerned about Spain's ability to repay its debts.

The fear is that if the crisis in Spain, which makes up about 11% of the total output of the 17 countries that use the euro, is not managed properly, it will have a negative impact on the region's growth and also hurt the global economic recovery.

On Tuesday, France's Cac 40 fell 3.1%, the UK's FTSE 100 and Germany's Dax lost about 2.5%.

Analysts warned that markets may fall even further amid a dip in investor morale.

"2012 is at risk of being a carbon copy of 2011, where equity markets began the year with a spring in their step before sentiment turned very bearish as the European sovereign debt crisis spiralled out of control", said Angus Campbell of Capital Spreads.

At the same time, a weaker-than-expected jobs data from the US has raised concerns about the recovery in the world's biggest economy.

Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets, said the combination of these factors was prompting investors to take a cautious approach.

"Investors are in a risk-off mode, with the US job numbers and the situation around Spain becoming an excuse for the sell-off."

'Wild card'

Adding to investors concerns have been fears about a slowdown in China, the world's second-largest economy, and one of the main drivers of global growth in recent years.

China's export sector is one of the biggest contributors to its economic expansion. However, a slowdown in its key markets such as the US and eurozone has raised fears that Beijing may not be able to maintain its high pace of growth.

Analysts said that investors were being cautious ahead of China's growth data, which is scheduled to be released later this week.

"How much is China going to slow down, that is the big wild card," Hans Goetti, chief investment officer of Finaport told the BBC. "The first quarter growth could be even less than 7.5%."

Chinese premier Wen Jiabao has set a growth target of 7.5%, the lowest since 2004.

Posted in: News, World News