Fears Drive Tokyo Stocks Down Again

Fears that more ailing Japanese companies may collapse sent Tokyo share prices plummeting Monday to their lowest closing level in almost 2-1/2 years.

The benchmark 225-issue Nikkei Stock Average sank 515.49 points, or 3.37 percent, closing at 14,799.40, its lowest close since July 1995. On Friday, the index had sunk 846.75 points, or 5.24 percent, the third-largest single day points decline of the year.

Banking issues led the fall, tumbling 5.6 percent, as last week’s failure of major food company Toshoku Ltd. reignited concerns over the credit risks of debt-ridden Japanese corporations, traders said.

Toshoku filed for protection with liabilities totaling $4.95 billion. It was the ninth Japanese company with publicly traded shares to go under this year.

“The market is waiting for the government to take steps to enhance disclosure of financial institutions,” said Sachio Ishikawa a manager at Chuo Securities. “The market is now very suspicious about the health of financial institutions.”

The banking sector was pummeled by selling by overseas and domestic institutional investors as well as the unwinding of cross-shareholding positions.

Sakura Bank, one of Toshoku’s main banks, finished the session 14 percent lower. Moody’s Investors Service put the bank’s single-A3 senior long-term debt rating and D-plus bank financial strength rating on review for possible downgrade.

“Although there weren’t fresh bearish incentives, the market’s mood remains weak, particularly for shares with weak financial standings,” said Hirofumi Inomata, branch manager at Izumi Securities.

The broader Tokyo Stock Price Index of all issues listed on the first section lost 37.38 points, or 3.20 percent, to 1,130.00. It had plunged 45.55 points, or 3.76 percent, on Friday.

Volume on the First Section of the Tokyo Stock Exchange was estimated at 660 million shares, down from 711.83 million Friday. Declines outnumbered advances 1,026 to 169, while 92 issues were unchanged.