Japan's Nikkei leads losses in limited Asian trade

03/05/2016 05:53 AST

Tokyo stocks plunged more than three percent as a surging yen hit exporters Monday, leading a sell-off across Asia in holiday-thinned trade and after worries about the global economy fuelled sharp losses in New York and Europe.

The losses in Tokyo come after the Bank of Japan's shock decision Thursday not to unveil any fresh stimulus, while US data also left dealers disappointed.

By the close Japan's Nikkei was down 3.1 percent, while Sydney shed 0.2 percent and Wellington 0.4 percent. Seoul lost 0.8 percent and Manila dived two percent.

Most other markets closed for the May Day public holiday. The yen has soared against the dollar since the BoJ decision, which came soon after the Federal Reserve indicated it was keeping its eye on market movements before hiking interest rates again.

And it remains elevated despite Japan Finance Minister Taro Aso trying to talk it down by hinting at possible intervention if its strength continues. He said Saturday the rally was "extremely worrying", adding that "speculative moves are seen behind it".

"Tokyo will continue watching the market trends carefully and take actions when necessary," he said. The greenback bought 106.50 yen Monday, slightly up from late Friday in New York but well down from the levels above 111 yen before the BoJ's surprise announcement.

- Takata dives -
"We expect short-term share market volatility to remain high," Shane Oliver, the Sydney-based head of investment strategy AMP Capital Investors, told Bloomberg News.

"Failure by the BoJ to do more soon risks unwinding all the progress on inflation expectations seen under Abenomics, particularly with the yen breaking to ever higher levels," he added, referring to Prime Minister Shinzo Abe's growth policy blitz. With the yen rallying, Japan's exporters were under pressure as it reduces the value of their overseas profits. Sony and Fast Retailing each lost more than four percent, while Toyota slipped 3.8 percent.

Troubled car parts maker Takata plunged 9.3 percent after reports in various media said more than 100 million vehicles equipped with air bags made by the company are likely to be subject to global recalls, up from the current 60 million.

The auto parts giant has been hammered by an exploding air bag defect blamed for at least 11 deaths.

On Sunday China released figures showing the country's factory activity eased slightly in April but continued to expand, helped by a recovery in the property market and indicating some level of stability was returning.

The selling in Asia came after US stocks ended Friday deep in the red as a weak consumer spending reading compounded a below-forecast economic growth result and an uninspiring set of corporate reports.

The Dow slipped 0.3 percent, the S&P 500 was off 0.5 percent and the tech-rich Nasdaq sank 0.6 percent.

In Europe, Frankfurt gave up 2.7 percent and Paris fell 2.8 percent as a strong jump in eurozone growth was offset by another fall in consumer prices that fanned worries about deflation in the bloc. London dived 1.3 percent.

But in early trade in Europe Monday Frankfurt rose 0.5 percent and Paris firmed 0.6 percent. London was closed for a public holiday.

Trade Arabia