TOKYO, Sept. 26 (Xinhua) -- Japan's benchmark Nikkei stock index closed sharply lower Monday amid concerns rate hikes to combat inflation in the United States and Europe could lead to a global economic slowdown and hurt Japanese exporters.
The 225-issue Nikkei Stock Average dropped 722.28 points, or 2.66 percent, from Thursday to close the day at 26,431.55.
The broader Topix index, meanwhile, lost 51.84 points, or 2.71 percent, to finish at 1,864.28.
Local dealers said that investors were in a risk-off mood following a three-day weekend here, with the market mood dented by Japan's intervention into the currency market on Thursday for the first time since 1998 to bolster what the government here has described as one-sided, speculative yen moves against the U.S. dollar.
With the Bank of Japan staying pat on its ultra-loose monetary policy last week and indicating rate hikes were not in the foreseeable future, sentiment was further soured by the U.S. Federal Reserve alluding to heftier rates hikes ahead and stoking further concerns over a recession.
"Japanese shares extended losses in the afternoon as investors' concerns about a slowdown in the global economy grew one step further after the U.S. Federal Reserve hinted at raising the benchmark rate to around 5 percent in 2023," Masahiro Yamaguchi, head of investment research at SMBC Trust Bank, was quoted as saying.
"So far, a weak yen has been supporting export-related issues, but the gloomy outlook of overseas economies has started to fan fears about the earnings of such Japanese companies," said Yamaguchi.
Other investment analysts concurred following recent rate hikes by central banks in Europe, with Aizawa Securities' Yasushi Yokoyama saying, "The risk of monetary tightening causing a recession has heightened. It's not a situation where we can aggressively buy stocks."
By the close of play, mining, oil and coal product, and transportation equipment issues comprised those that declined the most on the Prime Market, and falling issues outpaced rising ones by 1,687 to 124, while 26 ended the day unchanged.
Nikkei heavyweights dragged the broader market down, with technology startup investor SoftBank Group slumping 5.2 percent, while chip-making equipment manufacturer Tokyo Electron dropped 4.1 percent.
Exporters lost ground over concerns of a global recession impacting overseas earnings, with Mitsubishi Motors reversing 4.4 percent, Mazda Motor skidding down 5.6 percent, while Toyota Motor lost 3.2 percent.
Energy-oriented issues were also among the day's notable losers, with oil exploration giant Inpex plunging 9.9 percent, Eneos Holdings sinking 5.6 percent, while Idemitsu Kosan tumbled 7.6 percent.
On the Prime Market on Monday, 1,526.63 million shares changed hands, rising from Thursday's volume of 1,144.75 million shares.
The turnover on the first trading day of the week came to 3,342.01 billion yen (23.24 billion U.S. dollars).
Markets here were closed on Friday for a national holiday. ■