Tokyo Stocks Drop to Lowest since 2014 on Global Recession Fears

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Tokyo stocks dropped again Wednesday to their lowest level since late 2014, as fears of a global recession hammered investor confidence ahead of testimony by the head of the U.S. central bank.

The plunge came the day after the benchmark Nikkei index posted a 5.4-percent drop, its steepest one-day decline in percentage terms since June 2013.

On Wednesday, the Nikkei slipped 2.31 percent, or 372.05 points, lower at 15,713.39, the lowest since October 2014 and putting it deeper into bear territory -- a 20 percent fall from recent highs.

The Nikkei -- which fell more than four percent at one stage on Wednesday -- was last around this level before the Bank of Japan expanded its enormous asset-buying scheme, kicking off a big rally.

The broader Topix index of all first-section shares fell 3.02 percent, or 39.37 points, to 1,264.96.

"Japanese stocks are suffering... and it's difficult to bounce back," Tomoichiro Kubota, a senior analyst at Matsui Securities, told Bloomberg News.

"We have worries over financial institutions in Europe, problems in the bond market, and concerns aren't alleviated at all.

"There's still a sense of wariness toward commodity-related corporate earnings in the U.S., so that's a negative, plus the yen is being favored as a place of refuge."

With volatility coming back to stock markets around the world, analysts said attention will now turn to a congressional testimony by Federal Reserve boss Janet Yellen later Wednesday.

Investors will parse her comments for clues about the bank's monetary policy plans -- following December's interest rate hike -- as crude prices sit at 12-year lows and the global economy struggles.

In forex markets, the dollar fell to 114.67 yen from 115.14 yen Tuesday in New York. A stronger yen is a negative for Japanese exporters' profitability and tends to dent demand for their shares.

- Into the red -A brief rally stoked by the Bank of Japan's decision last month to adopt a negative interest rate policy -- effectively charging banks to park their cash with it in a bid to ramp up lending and boost the economy -- has fizzled.

The move also sent the yield on 10-year Japanese government bonds into negative territory for the first time Tuesday, as investors push into assets seen as safe bets.

Toyota declined 0.43 percent to 6,127 yen, while Sony fell 1.98 percent to 2,341 yen, and mobile carrier SoftBank dropped 3.50 percent to 4,603 yen.

Asahi Group, parent of Asahi Breweries, fell 8.02 percent to 3,334 yen, after the leading Nikkei business daily reported it was offering $3.5 billion to purchase two European beer brands, Grolsch and Peroni, from SABMiller.

Banking giant Mitsubishi UFJ tumbled 7.08 percent to 456.4 yen following a 8.73-percent drop Tuesday.

Rival Sumitomo Mitsui Financial Group dived 4.04 percent to 2,980.5 yen, Mizuho Financial Group fell 5.40 percent to 161.1 yen, and major brokerage Nomura dropped 3.54 percent to 491.9 yen.

Petroleum-linked shares eased owing to the ongoing weakness in oil prices. Energy explorer Inpex shed 2.80 percent to finish at 938.4 yen, while JX Holdings was 2.14 percent off at 443.2 yen.

Japan's financial markets are closed on Thursday for a public holiday.

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