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Japanese stocks sink as trading opens; oil falls [Updated]

March 13, 2011 |  6:39 pm

Stock prices tumbled in Japan on Monday as global investors reacted to the human and economic devastation wrought by Friday's magnitude 8.9 earthquake in the country's northern region.

Oil prices slipped and gold edged up.

The Nikkei-225 stock index was down 463 points, or 4.5%, to 9,790 about one hour into the trading session. The index had fallen as low as 9,656 early on. Indexes of smaller stocks were down as much as 9%.

[Updated at 1:30 a.m. PDT: The Nikkei index ended with a loss of 633.94 points, or 6.2%, to 9,620.49, near the lows of the session. The broader Topix index slumped 7.5%, and the Topix small-stock index plummeted 9.7%.]

The Nikkei had dropped 1.7% on Friday after the quake struck with a few minutes left to go in that day's trading.

Brokerage Nomura Securities said in a report Sunday that although "economic activity is bound to fall in the immediate wake of the earthquake, we expect output to recover rapidly as plants are repaired or production is transferred to alternative sites."

The firm noted that Japanese industrial production tumbled 2.6% in January 1995, the month of the Kobe earthquake, "but recovered in February and was back up at its December 1994 level by March."

The Bank of Japan pledged to provide "massive" liquidity to the financial system to help underpin the economy. Japanese interest rates already are the world's lowest.

Elsewhere in Asia and the Pacific, Australia's main blue-chip stock market index was off 0.8% and the Taiwan market was off 0.5%. Other markets in the region hadn't yet opened. (Go here for updates on stock market indexes in Japan and across Asia.)

Crude oil futures in New York were down $1.32 to $99.84 a barrel in electronic trading, in part reflecting expectations that global demand could dim in the near term as a large chunk of Japan's industry is shuttered. After reaching a 2 1/2-year high of $105.44 a barrel March 7, oil declined four straight days through Friday as some traders pulled back despite continuing unrest in the Middle East and North Africa.

In other markets Monday, gold was trading up $6.50 to $1,428 an ounce. (Go here for updates on commodity prices.)

The Japanese yen weakened against the dollar, to 82.20 yen per dollar from 81.86 on Friday. But some analysts expect the yen to strengthen in coming days as Japanese insurers and other companies sell assets held abroad and bring the money home. A stronger yen could hurt Japanese exporters as they try to get back on their feet after the quake.

-- Tom Petruno 


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