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Tokyo stocks extend loss to 3 days on new COVID variant woes

This file photo shows the Tokyo Stock Exchange. (Mainichi)

TOKYO (Kyodo) -- Tokyo stocks fell for the third straight session Tuesday, with the Nikkei index plunging over 5 percent in three days, on renewed concern over the effectiveness of existing vaccines for the Omicron variant of the coronavirus.

    The 225-issue Nikkei Stock Average ended down 462.16 points, or 1.63 percent, from Monday at 27,821.76, its lowest closing level since Oct. 7. The broader Topix index of all First Section issues on the Tokyo Stock Exchange finished 20.13 points, or 1.03 percent, lower at 1,928.35.

    Decliners were led by iron and steel, pharmaceutical and nonferrous metal issues.

    The Nikkei index has dropped 1,677.52 points since Thursday's close due to sell-offs triggered by reports of the discovery of the Omicron variant and a ban on new foreign entries that was introduced in Japan on Tuesday.

    Investors fled to the perceived safety of the yen and Japanese government bonds due to fears over the new COVID-19 strain, which has been detected in several countries and regions, including Japan, Britain, Israel and Hong Kong, dealers said.

    At 5 p.m., the dollar fetched 113.18-19 yen after briefly dropping to the upper 112 yen zone, compared with 113.48-58 yen in New York and 113.56-58 yen in Tokyo at 5 p.m. Monday.

    The euro was quoted at $1.1328-1330 and 128.21-25 yen against $1.1288-1298 and 128.14-24 yen in New York and $1.1263-1265 and 127.91-95 yen in Tokyo late Monday afternoon.

    The yield on the benchmark 10-year Japanese government bond dipped 0.015 percentage point from Monday's close to 0.055 percent. Bond yields move inversely to prices.

    Stocks rebounded sharply in the morning, tracking overnight gains on Wall Street, as investors scooped up battered shares after the Nikkei index closed the previous day at its lowest level since mid-October.

    But they reversed course and fell into negative territory in the afternoon after Stephane Bancel, CEO of U.S. pharmaceutical giant Moderna Inc., said in an interview with the Financial Times that existing COVID-19 vaccines may struggle against the Omicron strain.

    "The report likely suggests that the world will be under the risk of the Omicron variant until a vaccine effective against the variant is developed," said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co.

    Ichikawa said the report stoked fears over the variant's potential impact on the global economic recovery from the coronavirus pandemic, especially as many aspects of the newly discovered strain remain unknown.

    The Nikkei also fell in response to U.S. stock futures and the Hang Seng index in Hong Kong, brokers said.

    Some land transportation issues held onto gains after drawing buying on dips following sharp falls. East Japan Railway added 133 yen, or 1.9 percent, to 6,986 yen, Odakyu Electric Railway Co. climbed 57 yen, or 2.7 percent, to 2,187 yen, and Tobu Railway gained 17 yen, or 0.7 percent, to 2,565 yen.

    Leisure-related issues took a hit due to concerns over the variant. Travel agency H.I.S. dropped 30 yen, or 1.5 percent, to 1,941 yen, while Tokyo Disney Resort operator Oriental Land fell 60 yen, or 0.3 percent, to 17,840 yen.

    On the First Section, declining issues outnumbered advancers 1,533 to 572, while 79 ended unchanged.

    Trading volume on the main section rose to 2,545.76 million shares from Monday's 1,530.62 million shares.

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