Japan concerns send world stocks to 6-wk low

Tuesday, 15 March 2011 00:01 - - {{hitsCtrl.values.hits}}

LONDON, March 14 (Reuters) - World stocks fell to a six-week low on Monday, driven by a 7.5 percent fall in Japanese stocks, while oil tumbled as concerns grew about the economic damage from Japan’s earthquake and tsunami.

In emerging markets, construction and refinery shares rose thanks to expectations for large-scale reconstruction efforts in the economy hit by a triple blow of earthquake, tsunami and nuclear emergency -- Japan’s biggest crisis since World War Two.

The yen briefly fell after the Bank of Japan offered to pump a record 15 trillion yen in fund injections into the banking system to keep money markets stable. The currency later erased its losses.

Japanese stocks posted their biggest daily decline since October 2008 in trading which saw record-high trading volume among the Tokyo Stock Exchange’s biggest companies. Rolling blackouts started in the greater Tokyo area on Monday, paralysing factories, buildings and households.

“Japan is going to be a focus and it is not going to be a good day... There are not enough positive reasons out there to buy,” Matt Brown, trader at Catalyst Markets said.

“There are further worries about aftershocks and tsunamis and the possible costs to businesses. There are fears how these nuclear reactors can cope and any negative news will certainly weigh on the market.”

The MSCI world equity index fell 0.6 percent to levels last seen in late January. The index has erased almost all gains for the year, standing up 1.1 percent since January.

The Thomson Reuters global stock index fell 0.9 percent. The FTSEurofirst 300 index also fell 0.9 percent. The benchmark Nikkei index fell 6.2 percent, having hit a four-month intraday low at one point. The broader TOPIX index closed down 7.5 percent, the largest daily decline since October 2008 in the wake of the Lehman Brothers failure.

In the cash market, a record 4.88 billion shares changed hands on the Tokyo Stock Exchange’s first section. Emerging stocks rose 0.4 percent.