Tokyo shares end sharply lower on gloomy economy outlook

The TOPIX index of all First Section issues ended down 92.14 points, or 5.86 percent, at 1,480.87, the lowest level since February 17.

The bloodbath in Asian shares follows a big drop on Wall Street on Friday as the Dow Jones Industrial Average lost more than 500 points, or 3.12 per cent, in its worst single session in almost four years.

“Everyone is really surprised”, said Basil Dan, head of equity sales at Credit Suisse Group AG in Tokyo. Relatively speaking, Japan is looking attractive to other countries.

Also behind the tumble of the Tokyo stock market was the yen’s strength against the dollar.

Tokyo’s poor start came after New York shares plunged more than 3.0 percent Friday.

The downturn in the Chinese markets thus accelerated even though the government had announced on the weekend to allow the Chinese pension funds to invest in the stock markets. Almost 4 billion shares on the Topix changed hands. Toyota dived 4.6 percent, Honda Motor Co shed 4.2 percent, Panasonic Corp declined 2.6 percent and Hitachi fell 3.6 percent.

Tokyo’s benchmark stock index has dropped more than four per cent to finish at a six-month low, swept lower in a global equities rout as worries about China’s economy deepen. Losses were exacerbated after the automaker announced its biggest source of production in China would remain closed for at least two weeks, following deadly explosions in Tianjin this month. “There’s significant, ongoing disruption in Asia on the cusp of a potential end to quantitative easing and normalization of rates in the US.It’s a bit like walking across a minefield at the moment, so people are treading carefully, as they should”, said Stefan Worrall, cash equities manager at Credit Suisse. Cancer treatment developer OncoTherapy Science Inc. and Internet marketer Adways Inc. dropped at least 16 percent. European shares entered a correction and stocks from Hong Kong to Indonesia fell into bear markets.