Tokyo stocks drop to three-month low as China weakens yuan
TOKYO : Tokyo shares plunged to a three-month low on Thursday, after trading on Chinese markets closed early for the second day this week and authorities further weakened the yuan currency, fanning fears about the powerhouse economy.
The fall was in line with a global sell-off aggravated by North Korea’s claim that it completed a hydrogen bomb test on Wednesday and as another drop in oil prices sent petroleum-linked shares tumbling.
Beijing’s decision to lower its dollar reference point by the most since August sparked frantic selling in Chinese stocks, causing a new circuit breaker to kick in just 30 minutes into the day after markets fell more than seven percent.
Traders are growing increasingly concerned about a growth slowdown in China’s economy, which is expanding at its weakest rate in a quarter of a century. Recent data indicating contraction in factory activity have reinforced those fears.
China is a key driver of global growth, and a major market for Japanese firms. Japan’s major exporters took a hit as currency traders bought the yen, which seen as a safe investment in times of turmoil and uncertainty.
The benchmark Nikkei 225 index tumbled 2.33 percent, or 423.98 points, to 17,767.34, its lowest level since early October.
The broader Topix index of all first-section shares fell 2.08 percent, or 30.90 points, to 1,457.94.