Nikkei falls five percent despite interest-rate cut (Lead)

October 31st, 2008 - 2:12 pm ICT by IANS  

Tokyo, Oct 31 (DPA) Japan’s benchmark Nikkei 225 Stock Average plunged five per cent Friday and fell below 9,000 despite the Bank of Japan’s announcement of an interest-rate cut as investors turned bearish over lowered corporate earnings forecasts.The Nikkei index dropped 452.78 points to close at 8,576.98.

The broader Topix index of all first-section issues also fell 32.25 points, or 3.59 percent, to 867.12.

The Bank of Japan cut its short-term interest rate to 0.3 percent from 0.5 percent to ease the impact of the global financial turmoil, but it was not enough to counteract the lowered profit forecasts for such firms as Sony Corp, Fujitsu Ltd, Canon Inc., Mizuho Financial Group Inc., Sumitomo Mitsui Financial Group Inc and Nintendo Co.

Despite Friday’s drop, stocks traded in positive territory for the week thanks to the US Federal Reserve’s rate cut and the falling value of the yen, which makes exporters goods cheaper abroad and boosts their overseas earnings.

For the week, the Nikkei gained a record 12 percent, and the Topix was up seven per cent.

On currency markets at midday (0300 GMT), the dollar was quoted at 98.47-52 yen, down from Thursday’s 5 pm quote of 98.74-76 yen.

The euro was quoted at $1.2829-34, down from Thursday’s quote of $1.3211-12, and at 126.33-43 yen, down from 130.45-49 yen.

The Tokyo markets are to be closed Monday for a Culture Day national holiday. Trading will resume Tuesday.

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