Tokyo stocks sharply lower in early trade

TOKYO – Tokyo stocks were down about two percent in early trade Monday after heavily indebted Greece said it would miss the deficit target set for it by the IMF and EU.

The benchmark Nikkei 225 index at the Tokyo Stock Exchange opened down 1.52 percent and widened the loss to 1.99 percent or 173.37 points to 8,526.92 in the first 10 minutes of trading.

The euro fell to $1.3366 in early Asian trade from $1.3451 in New York late Friday and to 103.04 yen from 103.12 yen.

Stocks opened lower despite a report released by the Bank of Japan early Monday that showed the business confidence of major manufacturers turned positive in September after diving in the wake of Japan’s March disasters.

Negative factors in Tokyo include sharp declines on Wall Street on Friday and a weaker euro against the yen, brokers said.

“The outlook for Japanese equities remains uncertain due to the cloudy global economic conditions, European debt problems and the sharp appreciation in the yen,” said Hiroichi Nishi, general manager at SMBC Nikko Securities.

Greece said Sunday that its budget deficit should drop to 8.5 percent of GDP in 2011 from 10.5 percent last year, short of a 7.4-percent target initially fixed in June.

The announcement deepened fears of a default as the target had been set by European leaders as part of its bailout deal.

EU-IMF auditors returned to Athens on Thursday last week, four weeks after they abruptly left disappointed at Greece’s lack of progress in implementing promised structural reform measures.

They pressed the government to undertake further austerity measures to reduce expenses and increase revenues.

On Friday US stocks dropped more than two percent after sharp losses in Europe as signs of slower growth spanning China, Europe and the United States, and the ongoing Greek crisis, hung darkly over the markets.

Dow Jones Newswires contributed to this article