LONDON (SHARECAST) - Shares in Tokyo skidded into the red on Wednesday, in robust volumes, as renewed strength in the yen prompted a broad round of profit taking.
The benchmark Nikkei 225 index closed down 278 points at 10,600 in Tokyo, the biggest one-day loss since May 2012. Wednesday's losses came after four straight days of gains. The Hang Seng moved 24 points into the red at 23,356.
The Japanese yen recovered for a second day after the nation's Economics Minister Akira Amari warned against an overly weak currency. He cautioned that excessive yen weakness could lead to rising import prices.
Asian markets were also hit by gloomy global growth forecasts. The World Bank cut its global growth forecast for 2013, citing the difficult global recovery, despite the improvement in the financial markets. The World Bank now expects growth of 2.4% this year compared to forecasts of 3% last year.
Market sentiment was further dampened by comments from Eurogroup chief and Luxembourg Prime Minister Jean-Claude Juncker that the euro was reaching "dangerously high" levels. The comments hurt the euro, sending its down by 1.26% against the yen. The dollar changed hands at ¥88.07 from ¥88.92 the previous session.
Shares on the move included big name retailer Fast Retailing which slumped 4.6% after broker Goldman Sachs downgraded the firm to "neutral" from "buy". The broker said Fast Retailing's earnings outlook has mostly been priced into the share price.
The stronger yen weighed on shares such as Honda Motor which fell 3%, Toyota Motor fell 2.6%, Nikon Corp lost 4.6% while Fanuc and Canon also slipped lower. Telecom firm Softbank dropped 3.3%.
Hong Kong financials came under pressure as markets eagerly await China growth figures out on Friday.
Chinese internet firm Tencent bucked the otherwise downward trend, logging a 3.5% gain.
Investors are also looking ahead to the Bank of Japan's policy review on January 21-22nd. It is widely expected that the BoJ will increase its government bond purchases.