Tokyo Stocks Fall, Yen Bounces as Oil Customer Reacts

Tokyo stocks plummeted in early afternoon trading today and the yen fluctuated wildly against the dollar as Japan monitored news of an Iraqi invasion of Kuwait.

Japan is hugely dependent on Persian Gulf oil supplies and a Foreign Ministry official said of the attack: “We deeply regret (the development) because it involves military actions.

“The conflict, if further aggravated and prolonged, would have significant impact on Japan in various forms, especially in terms of oil supplies.”

On the Tokyo Stock Exchange, the key Nikkei index--which had fallen 255 points in the morning session, partly over gulf tensions--plunged almost another 400 points in the first 25 minutes of afternoon trading.

It stood at 30,199.64, just over 638 points down on the day or 2.07%.

Tokyo currency dealers were also anxiously watching gulf developments with news of the fighting between the two oil producers boosting the dollar by nearly a yen.

“It was incredible. The market was thin, but it just went wild,” said Yuko Fukakusa, assistant manager at Tokai Bank. “The dollar’s safe-haven status is still alive and well.”

The dollar fluctuated violently between its morning low of 146.50 yen and high of 148.15, reached after frenzied buying after a Japanese translation of the news appeared.

The dollar was at 147.70 yen at midday.

Yen-denominated gold futures rose sharply.