Tokyo shares flat despite yen, eurozone worries

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TOKYO: Tokyo shares were flat by the lunch break Wednesday after recovering from early losses over global concerns about the deepening eurozone debt crisis, with a strong yen dampening sentiment.

The Nikkei added 0.89 points or 0.01 percent to 9,926.81 by the break, while the Topix index gained 1.73 points, or 0.20 percent, to 858.92.

With the euro under pressure, the safe-haven yen's appreciation makes Japanese exports less competitive in foreign markets and reduces the value of firms' repatriated overseas earnings.

Gains in oil-linked shares offset exporter losses Wednesday, said dealers.

While exporters were under pressure, the overall market should avoid big selloffs, said Hideyuki Ishiguro, investment strategy supervisor at Okasan Securities.

The yen's rise prompted Japanese Finance Minister Yoshihiko Noda to address local media, calling the trend "one-sided".

"I would like to continue to carefully monitor the market today," he said, without indicating any plan to intervene in the market to drive down the yen.

The euro continued to be buffeted by eurozone debt worries, with the latest blow to the single currency coming from Tuesday's move by Moody's Investors Service to cut Ireland's credit rating to junk status.

Europe's woes have dominated investor attention globally amid fears debt contagion would spread to Italy and Spain, respectively the eurozone's third and fourth-biggest economies, and trigger a cascading crisis in world markets.

Overnight, US shares dropped on the eurozone worries, with the Dow Jones Industrial Average off 0.47 percent.

The single European currency was at $1.3995 against the dollar in Tokyo trade, from $1.3975 late in New York Tuesday, and at 111.20 yen from 110.75. The dollar was at 79.45 yen, from 79.25.

Exporter stocks were mixed, with Nikon down 3.38 percent at 1,797 yen and Canon off 0.79 percent at 3,765. Sony added 0.32 percent to 2,143 yen.

Inpex was up 2.05 percent at 596,000 on gains in US crude.

Mitsubishi Electric rose 1.09 percent to 927 yen and Toshiba gained 0.97 percent to 416 after a European Court Tuesday annulled fines imposed on both companies by the European Commission for participating in a product cartel. (AFP)