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Japan's Nikkei stock index briefly down 2% on China property worries

People walk by an electronic stock board of a securities firm in Tokyo on Sept. 21, 2021. (Mainichi/Ririko Maeda)

TOKYO (Kyodo) -- Tokyo stocks slid Tuesday morning, with the benchmark Nikkei briefly sinking over 2 percent, adding to an overnight global market rout on concerns that a potential default by Chinese property developer Evergrande Group could lead to a slowdown in the world's second-largest economy.

    The 225-issue Nikkei Stock Average shed 601.48 points, or 1.97 percent, from Friday to 29,898.57. Japanese financial markets were closed Monday for a national holiday. The broader Topix index of all First Section issues on the Tokyo Stock Exchange was down 35.34 points, or 1.68 percent, at 2,064.83.

    Decliners were led by marine transportation, iron and steel, and machinery issues.

    With the mood shifting to risk-off, investors sought the Japanese yen, perceived as a safe-haven asset.

    At noon, the dollar fetched 109.59-60 yen compared with 109.33-43 yen at 5 p.m. Monday in New York.

    The euro was quoted at $1.1732-1732 and 128.57-58 yen against $1.1722-1732 and 128.21-31 yen in New York late Monday afternoon.

    Minutes after the stock market opened, the Nikkei dropped below the 30,000 mark for the first time in nearly two weeks on an intraday basis.

    The fall followed drops in U.S. and European equities on Monday on growing fears that the debt-laden Chinese property giant could default as a payment deadline looms this week, brokers said.

    "Investors were worried a possible default on the massive debt would further cool China's real estate sector and increase risk of a slowdown in Chinese growth," said Maki Sawada, a strategist at Nomura Securities Co.'s investment content department.

    "But even if Evergrande defaults, the risk that it will turn into a global financial crisis remains low," Sawada added.

    Tokyo stocks had recently lifted in anticipation for a new government following Prime Minister Yoshihide Suga's decision to resign amid plunging public support, hitting their highest level in 31 years last week.

    On the First Section, declining issues outnumbered advancers 1,995 to 156, while 36 ended the morning unchanged.

    Cyclical shares sensitive to economic fluctuations, such as shippers and steelmakers, fell notably amid uncertainty over China's economy.

    Nippon Yusen sank 250 yen, or 2.4 percent, to 10,100 yen and Kawasaki Kisen dropped 200 yen, or 2.6 percent, to 7,420 yen.

    Kobe Steel was off 19 yen, or 2.7 percent, to 691 yen and JFE Holdings shrank 71 yen, or 3.9 percent, to 1,763 yen.

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