Originally created 04/22/00

Tokyo stocks plunge



TOKYO -- The benchmark 225-issue Nikkei Stock Average plunged 3.7 percent today, and traders said the fall was related to next week's planned change in the stocks making up the index.

The dollar rose against the yen in Tokyo trading.

The Nikkei index fell 706.64 points to 18,252.68 points. On Thursday, it closed down 127.30 points, or 0.67 percent.

The dollar bought 105.68 yen in late Tokyo trading, up 0.90 yen from 104.78 yen Thursday but slightly below its late New York level Thursday of 105.73 yen. During the day, it ranged from 105.58 yen to 105.89 yen.

On the Tokyo stock market, prices started higher as investors were cheered by a 169.09-point rise Thursday in the Dow Jones industrial average, leaving the New York index at 10,844.05. U.S. stock and bond markets and many financial centers in Europe are closed today in observance of Good Friday.

Tokyo investors later began selling industrial stocks which will be removed from the Nikkei index starting Monday.

Thirty of the index's stocks will be replaced to better reflect changes in Japan's economy, the Nihon Keizai newspaper, a major Japanese financial daily and the administrator of the index, said earlier this month.

Investment funds that try to mimic the performance of the index no longer need to hold the shares being removed from the Nikkei. In addition, removal of stocks from the index tends to lower their prestige and makes them less attractive to investors.

"People were selling not only the old components that will leave the index, they were also selling those that will stay in the index," said Chuck Lambert, market analyst at Jardine Fleming Securities.

The broader Tokyo Stock Price Index of all issues listed on the first section rose, showing that much of the selling of the Nikkei was technical.

The TOPIX gained 5.12 points, or 0.31 percent, to finish at 1,634.12. The index closed up 9.18 points, or 0.56 percent, on Thursday.

Volume on the first section was estimated at a hefty 1.1 billion shares, up from 692 million shares Thursday. Retreating issues outnumbered advancers 968 to 306, while 106 issues were unchanged.

In currency dealings, the plunge in the Nikkei spurred a small burst of dollar-buying. But traders said the impact of the Nikkei's drop on currency trading was limited, noting that the TOPIX held steady.

There was strong demand to buy back the dollar after the greenback's rise overnight, but other investors started selling the U.S. currency as it rose, dealers said, leaving it slightly weaker compared with it's New York levels.

"Investors seem to be hedging against a stronger yen," said Takeo Suzuki, assistant foreign exchange manager at Nomura Trust and Banking.

In other currencies, the euro was traded at 99.16 yen, up from 98.30 yen late Thursday.

The yield on the benchmark 10-year Japanese government bond stood at 1.7300, down from 1.7350 percent Thursday. Its price rose to 101.46 from 101.42.