Nikkei Stocks Plunge Amid Japan’s Political Turmoil

Jitters over Japan’s political upheaval sent the Tokyo Stock Exchange’s main index plunging 3% on Monday and drove the yen down sharply against the U.S. dollar.

The 225-issue Nikkei average lost 592.11 points, closing at 19,212.43. It had shed 120.97 points, or 0.61%, on Friday.

Trading was nervous and relatively thin as traders tried to assess political developments.

Prime Minister Kiichi Miyazawa lost a no-confidence vote in Parliament on Friday and was forced to call early elections. Defectors from Miyazawa’s Liberal Democratic Party were threatening to form coalitions with opposition parties to challenge the LDP’s 38-year rule.

“The market is pretty confused,” said Daniel Murell, a trader at Sanyo Securities. “It’s really very hard to predict what’s going to happen in the political situation.”

“We are in new territory here,” said George Nimmo of SBCI Securities.

Meanwhile, the dollar continued to build on the momentum Monday in Tokyo, where world currency trading begins. The dollar closed there at 110.48 yen, up 3.08 yen from Friday’s close.

Later in New York, the dollar fetched 110.65 yen, up from late Friday’s 109.75 yen.