Tokyo stocks close sharply lower as oil price slump adds to risk-off mood

Tokyo stocks closed sharply lower Tuesday as a risk-off mood was triggered by U.S. shares' retreat overnight and a continued slump in oil prices, with the latter darkening the outlook for the global economy.

While hopes for further easing from Japan's central bank helped cap losses, the 225-issue Nikkei Stock Average still dropped 402.01 points, or 2.35 percent, from Monday to close at 16,708.90.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, finished 32.40 points, or 2.33 percent, lower, ending the day at 1,360.23.

Local brokers said that Wall Street closing lower overnight set a negative tone in early trading that was soon compounded by prices for crude oil continuing to slide.

While concerns for the global economic outlook also contributed to a risk-off mood, as has been the case following a general slowdown, traders here said that investors were now keenly eyeing central bank's meetings this week in the U.S. and Japan's response thereafter, in signs of further easing measures.

Analysts after the closing bell Tuesday suggested that if Japan's central bank stays pat on its monetary easing policy, rather than unleashing more easing measures to underpin the markets, then shares could continue a protracted downswing.

All categories on the main section closed in negative territory at the end of trading Tuesday, with notable decliners led by marine transportation, mining, and pulp and paper-linked shares, with declining issues pummeling advancing ones by 1,759 to 148, while 28 remained unchanged at the close.

Trading volume on the main section dropped to 2,157.29 million shares, down from Monday's volume of 2,291.70 million shares.

The turnover for the day was 2,112.4 billion yen (17.89 billion U.S. dollars). Enditem