Japanese stocks fell to a fresh 26-year low today after the Dow Jones industrial average closed below 7,000 for the first time in more than 11 years on growing fears over the health of the US financial sector.
The benchmark Nikkei 225 stock average tumbled 104.82 points, or 1.44 per cent, to 7,175.33 in the morning trade, extending further losses after a 3.8-per cent drop yesterday. That marked a fresh 26-year low for the Nikkei, which closed at 7,114.64 on October 7, 1982.
The broader Topix index also fell 1.67 per cent to 722.32.
"Investors are becoming nervous about the state of the US financial sector. They were worried about deteriorating assets in the US financial sector," said Kazuhiro Takahashi, equity strategist at Daiwa Securities SMBC Co Ltd.
Investors were jittery after insurer American International Group Inc reported a staggering USD 61.7 billion in quarterly losses, sparking fresh fears about the health of the US financial system. The worries pressured the Dow, which fell 299.64, or 4.24 per cent, to 6,763.29. The Dow last closed below 7,000 on May 1, 1997.
The US credit crisis and recession have slashed more than half the average's value since it hit a record high over 14,000 in October 2007. And now many investors fear the market could take a long time to regain the lost 7,000.