Tokyo stocks fell Monday, with the benchmark Nikkei stock index losing 0.32 percent to its lowest closing level since March 2009 on fears a United States congressional committee will fail to meet a deficit reduction deadline and a government report showing that Japan's exports slumped more than expected in October also weighed heavily on investor sentiment.
Brokers here said that export-related issues like Honda Motor Co. and Panasonic Corp. came under heavy pressure following a report released by Japan's finance ministry showing that exports fell 3.7 percent in October from a year earlier, marking the first decline in three months.
The ministry's figures showed that the value of exports totaled 5,512.8 billion yen (71.68 billion U.S. dollars) in the recording period, while that of imports rose 17.9 percent in October from a year earlier to 5,786.6 billion yen, creating a trade deficit for the first time in two months of 273.8 billion yen.
Analysts here said that the latest trade deficit figures highlighted the toll that debt contagion in the eurozone has taken here as the euro has dropped against the yen, against a backdrop of global economic malaise, and Japanese exporters have seen their overseas profits eroded when repatriated and have lost a degree of competitive on a global stage due to the yen's rise.
"The trade deficit data and the yen remaining at a high level hit major exporters, prompting them to renew their year-to-date intraday lows and dampen overall market sentiment," said Hiroichi Nishi, equity division manager at SMBC Nikko Securities Inc.
In addition, traders here pointed to fears that leaders of a special deficit reduction committee of the U.S. Congress will announce later on Monday that they have failed to reach a deal on how to reduce the federal deficit by 1.2 trillion U.S. dollars.
The deadline for the group of 12 Republicans and Democrats dubbed the "supercommittee" to approve a plan is Wednesday, but for the plan to be actuated in time an agreement has to be reached by Monday evening in the United States, but a consensus over tax raising initiatives and cutting social programs has yet to be reached.
"The market continues to be in a downtrend as nothing has changed since last week," said Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co. "Speculation is mounting that the U.S. may end up putting off the deficit issue. The market's tide won't change unless something new comes out of Europe."
The 225-issue Nikkei Stock Average lost 26.64 points from Friday to 8,348.27, marking its lowest closing level since March 31, 2009, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange dropped 2.90 points, or 0.40 percent, to finish the day at 717.08.
Japan's automakers underperformed the broader market, pressured by news of falling exports and a strong yen against the euro, and top-maker Toyota Motor Corp. skidded down 2.6 percent to 2,385 yen. Smaller rival Honda Motor Co. fell 2.2 percent to 2,153 yen and Nissan Motor Co. lost 3 percent to finish at 653 yen on the first trading day of the week.
Other exporters also lost ground, with consumer electronics giant Sony Corp. dropping 2.8 percent to 1,266 yen and counterpart Panasonic Corp. retreating 2 percent to 672 yen.
Falling demand and prices for DRAM chips sent some high-tech issues lower Monday, with Elpida Memory Inc. tumbling 7.3 percent to 319 yen and Advantest Corp. falling 4.5 percent to 810 yen.
Shipping lines were also among Monday's notable decliners and Nippon Yusen K.K., Japan's biggest shipper, sank 3 percent to 161 yen and second-ranked Mitsui O.S.K. Lines Ltd. dived 6.9 percent to 228 yen.
Scandal-hit optical equipment maker Olympus Corp. jumped by its daily limit of 16 percent to 725 yen after Nippon Life Insurance Co. said it will continue to support the disgraced company.
The Tokyo Stock Exchange on Monday began to implement a 30 minute extension to its trading morning in the hope of revitalizing activity amid intensifying global competition to secure investors.
The TSE on Monday extended the morning trading session to finish at 11:30 a.m. local time instead of the previous 11:00 a.m. local time. The afternoon trading session, from 12:30 p.m. to 03: 00 p.m. local time, remains unchanged.
The new trading hours, aimed to provide market players with more time to trade, were supposed to begin in May this year, but were delayed due to the March disasters, TSE officials said.
Trading volume on Monday fell to 1.22 billion shares on the Tokyo Exchange's First Section, down from Friday's volume of 1.45 billion shares, with advancing issues marginally outnumbering declining ones by 748 to 747.