Tokyo stocks tumbled Thursday, with the Nikkei Stock Average briefly dipping below 13,000 for the first time in 28 months, after the release of data showing that Japan's economy has contracted and fears about the earnings of high-technology firms.
The benchmark 225-issue Nikkei, which rebounded 96.16 points Wednesday, plunged 227.78 points, or 1.7 percent, to close at 13,138.23. The broader Tokyo Stock Price Index of all first section issues dived 17.8 points, or 1.4 percent, to 1,249.67.
Soon after the start of afternoon trading, the Nikkei sank to 12,966.83, down nearly 400 points from Wednesday's close and slipping below 13,000 for the first time since Oct. 15, 1998.
The bellwether opened lower as the U.S. Nasdaq composite index dropped 56.67 points to 2,607.82 on Wednesday led by a tumble in Cisco Systems on a downward revision of its forecast earnings.
Tokyo also took a severe beating from a government announcement that gross domestic product in the July-September quarter shrank 0.6 percent from the previous quarter, which translates into an annualized contraction of 2.4 percent. A preliminary report indicated GDP grew 0.2 percent in the quarter. Brokers said that although the market had anticipated a fall in GDP, the revised figures were worse than predicted.
Shuzo Nakamura, managing director of the Shinko Research Institute, said he considers the Nikkei's dip below 13,000 to be an overreaction.
"The market was excessively affected by the Nasdaq," he said. "But I don't believe the tumble could lead to something like stock market panic as the government is already in the process of formulating measures to boost stock prices."