TOKYO, Aug 08 (AFP): Tokyo stocks dropped more than 3.0 per cent Friday morning as investors reacted to US President Barack Obama saying he had authorised air strikes on Iraq.
The Nikkei 225 index lost as much as 3.14 per cent to hit 14,753.84 as Obama's comments sparked a sharp uptick in the yen, which is bad for Japanese shares, while Nikon shares lost almost 10 per cent on poor results announced the previous day.
The benchmark index ended the morning session at a two-month intraday low of 14,776.88, down 2.99 per cent, or 455.49 points, while the Topix index of all first-section shares fell 2.49 per cent, or 31.28 points, to 1,226.84.
The Nikkei's tumble below the psychologically important 15,000 level came after a fall on Wall Street and as the yen-seen as a safe-haven currency in times or turmoil or uncertainty-shot up in forex markets.
Obama announced that he had authorised US air strikes on Iraq and humanitarian supply drops to prevent a "genocide" by Islamist extremists against minorities.
But the US leader, who was an outspoken critic of his predecessor George W. Bush's 2003 invasion of Iraq, said he was not sending any ground forces back to the troubled country.
The dollar sank to 101.65 yen in midday Tokyo trading, compared with 102.09 yen in New York late Thursday, while the euro also dropped to 135.82 yen from 136.42 yen.
A stronger yen is bad for Japanese exporters as it digs into their profitability and makes them less competitive overseas.
US stocks finished lower Thursday as advances by jihadists in Iraq trumped encouraging employment data and spurred talk of possible US military action.
The Dow Jones Industrial Average dropped 0.46 per cent, while the broader S&P 500 fell 0.56 per cent.
"It's been so long since US shares faced a major correction that investors may have forgotten that there is little hope for Japan stocks to stage a sustainable rise without overseas market and investor support," Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities told Dow Jones Newswires.
"But with US central bank stimulus tapering due to wind up in the coming months and geopolitical tensions between Russia and Ukraine still simmering, it could be a rough ride for stocks in the second half of 2014."
In Tokyo share trading, camera maker Nikon fell 9.34 per cent to 1,436.0 yen after it said Thursday its quarterly net profit had dropped from a year ago.
