Nikkei closes down 0.2 per cent

Tokyo stocks dipped further below the 9,000 line today, extending hefty losses sustained during the most volatile week since the March 11th earthquake as the yen's strength prompted foreigners to sell carmakers, pulling Toyota to its lowest level this year.

The Nikkei's loss took it 12 per cent below its post-quake closing high, hit on July 8th, after a spike in volatility across markets on rumours about the health of European banks, mounting questions about the stability of funding markets and authorities struggling to solve a crisis of confidence in Europe.

Other institutional investors took a similar approach, piling into domestic demand-related and defensive sectors such as pharmaceuticals and retailers, while dumping the likes of

Honda, which was down 12 per cent on the week, and Hitachi, which ended the week 7 per cent lower.

The Nikkei lost 0.2 per cent to end at 8,963.72, while the broader Topix fell 0.4 per cent to 768.19.

The Nikkei was down 3.6 per cent on the week.

The move away from yen-sensitive and globally exposed large-cap blue-chip exporters bolstered the most outstanding rally of the week, that of social networking service operator Gree.

Gree rocketed up nearly 30 per cent for the week in heavy turnover, hitting all-time highs time and again, after punchy earnings and a solid outlook at the beginning of the week prompted JPMorgan to hike the stock's rating to "buy". Today it rose 4.5 per cent to 2,283 yen.

Gree's startling ascent contrasted with the fall of gaming giant Nintendo , which hit its lowest intra-day level since May 2004, closing down 4.6 per cent at 10,900 yen a day after it started selling the Nintendo 3DS handheld game device with a much-reduced price tag in Japan.

Some of the selling in exporters was offset by dip-buyers who chased the battered stocks of financials higher, reflecting a rebound in the sector on Wall Street. Dai-ichi Life Insurance

added 2.2 per cent to 93,000 yen, boosted by a hike in April-June core profit, and T&D Holdings advanced 0.3 per cent to 1,624 yen.

Volumes ahead of the weekend eased from this week's highs, with 2 billion shares changing hands on the main board, in line with the last week's daily average

A mild uptick in sentiment was apparent as players scooped up stocks of some energy-related companies such as Japan's largest oil and gas developer Inpex Corp , which gained 2.4 per cent despite falls in prices of oil.

Market players said today's falls were limited as investor confidence was boosted after purchases of exchange-traded funds to the tune of 25.6 billion yen ($333 million) carried out by the Bank of Japan the day before and by hopes for a technical rebound next week.

The Nikkei's 14-day RSI, a measure of momentum that is used to indicate overbought or oversold conditions, was below 30 for the whole week - the oversold threshold. That is the longest string of days below 30 since the depths of the financial crisis in late 2008.

Reuters