TOKYO -- Tokyo's key stock average plunged nearly 2.5 percent Friday to a three-month low in response to Japan's slower-than-expected economic growth for the second quarter. The disappointing news also lifted the dollar against Japanese yen.
The Nikkei Stock Average of 225 issues closed down 270.87 points, or 2.46 percent, at 10,757.20 points - the lowest since the May 18 finish of 10,711.09 points. On Thursday, the index slipped 21.39 points, or 0.19 percent.
The dollar was quoted at 111.94 yen at 5 p.m. (0800 GMT) Friday, up 1.31 yen from late Thursday in Tokyo and also above the 110.89 yen it bought in New York later that day.
Tokyo stocks fell as investors sold a broad range of issues after the government announced that Japan's economy grew 0.4 percent in the quarter ended June 30 - or at an annualized rate of 1.7 percent.
Economists surveyed by Dow Jones Newswires had forecast the gross domestic product data would show 1.0 percent growth from the previous quarter, or 4.2 percent in annualized terms. The GDP measures the value of a nation's goods and services.
The data sparked concerns that Japan's economic recovery wasn't as sturdy as many had figured. The news also sent shockwaves through other financial markets in Tokyo: the yen plunged and bonds rallied.
"The gross domestic product data were disappointing," said Makoto Sakuma, a senior fund manager at Asahi Life Asset Management Co.
International blue chips, including electronics giants Matsushita Electric, NEC and Sony, as well as automakers Honda Motor, Nissan and Toyota, fell Friday.
Still, some market players said the GDP data understated the strength of business investment and that underlying growth was still solid.
UBS Securities' top economist in Japan, Hiromichi Shirakawa, said "the economy was catching its breath."
The broader index of all issues on the Tokyo Stock Exchange's first section fell 20.41 points, or 1.83 percent, to close at 1,096.81. The TOPIX dipped 3.89 points, or 0.35 percent, the day before.
Overnight in New York, rising crude oil prices and disappointing earnings from Hewlett-Packard Co. sent stocks plummeting.
The Dow Jones industrial average fell 123.73, or 1.2 percent, to 9,814.59. The Nasdaq composite index was down 29.93, or 1.7 percent, at 1,752.49 - its lowest close since Aug. 18, 2003.
In currencies, the yen weakened against the dollar on the disappointing second-quarter GDP.
The euro fell to $1.2188 Friday afternoon in Tokyo from $1.2266 late Thursday. Against the yen, the euro was up at 136.35 yen from 135.68 yen.
In the bond market, the yield on Japan's benchmark 10-year government bond fell to 1.5600 percent from 1.6450 percent late Thursday. The price rose 0.88 to 102.89 points.
On the Net:
Tokyo Stock Exchange: http://www.tse.or.jp