Tokyo stocks fell to a 28-month low today and the yen fell after data suggested the Japanese economy may be already in another recession.
Nerves started fraying early when Japanese government figures confirmed the economy contracted in the third quarter last year, pushing the yen to a one-week low on speculation that interest rates would have to be cut soon.
The benchmark Nikkei average ended down 227.78 points or 1.70 per cent at 13,138.23 after earlier breaching the key 13,000 barrier for the first time since October 1998.
"This is definitely earnings fears creeping in the market," said Partners Asset Management senior strategist Mr Takashi Miyazaki.
The government said gross domestic product fell 0.6 per cent in the July-September period compared with the previous quarter instead of rising by 0.2 percent as initially estimated.
The revision, reflecting weaker business investment, had been expected but it means Japan enjoyed only two quarters of growth after dipping back into recession in the second half of 1999.
Reuters