Japanese shares fall on Egypt turmoil

Japanese shares dropped 1.18 percent on Monday following falls on Wall Street as the political turmoil in Egypt hit investor risk appetite, dealers said.

The Nikkei index at the Tokyo Stock Exchange fell 122.42 points to 10,237.92, while the Topix index of all first section shares fell 1.04 percent to 910.08.

Asian regional markets fell as investors assessed the impact of six days of protest in Egypt against President Hosni Mubarak’s three-decade rule, following the deaths of at least 125 people.

Investor sentiment was battered after the Dow Jones Industrial Average dropped 1.4 percent on Friday, its largest one-day drop since November due to the continued political turmoil in Egypt.

Safe-haven demand for the Japanese yen versus more risk-sensitive currencies saw the Japanese unit rise, hitting the shares of exporters.

The unrest has raised worries that similar violence could spread in the rest of the oil-rich Middle East, sending crude prices higher and raising concerns over the longer term impact on global growth.

New York’s main contract, light sweet crude for March delivery, was up 37 cents at $89.71 per barrel in morning trade.

Street demonstrations continued against Mubarak, following a similar revolt in Tunisia that ousted President Zine El Abidine Ben Ali.

“We didn’t expect the spread of geopolitical risk from Tunisia to this extent,” Mizuho Securities strategist Tsuyoshi Segawa told Dow Jones Newswires.

“If the unrest in Egypt drags on, there is a possibility that falls in global equities will continue,” said Okasan Securities strategist Hideyuki Ishiguro.

A rising yen hurts Japanese exporters by making their products more expensive overseas and by shrinking their foreign earnings.

The yen was at 81.97 against the dollar up from 82.09 yen in New York Friday. The Japanese unit rose to 111.61 against the euro from 111.72.

Nissan Motor, which operates an assembly plant in Egypt, fell 2.23 percent to 830. Toshiba, which is preparing to build a TV manufacturing plant there, fell 3.19 percent to 485.

Japanese oil developer Inpex surged 0.57 percent to 526,000, helped by a sharp rise in crude prices following tensions in Egypt and a rating hike by MS MUFG Securities.

Fujitsu plunged 6.23 percent to 511 after it cut its full-year profit forecasts on Friday due to a delayed recovery in IT spending in Japan and the falling profitability of some projects outside Japan.

Among other major shares, Sony fell 2.71 percent to 2,829. Panasonic lost 1.74 percent to 1,124.

Toyota Motor rose 0.29 percent to 3,400. Honda Motor fell 1.41 percent to 3,475.