Japan stocks fall, Nikkei posts biggest monthly drop

Tokyo: Japan's Stocks retreated on Friday, capping the Nikkei 225 Stock Average's worst monthly drop on record, as lower company earnings forecasts overshadowed the central bank's first rate cut in seven years.

Konica Minolta Holdings Inc. and Mazda Motors Ltd. dived more than 10 per cent after slashing profit targets.

Electronics maker Pioneer Corp. sank 15 per cent after widening its annual loss forecast and naming a new president.

Olympus Corp., the world's largest endoscope maker, lost 7.7 per cent after reporting an 89 per cent drop in first-half earnings.

The Nikkei 225 fell 452.78, or 5 per cent, to close at 8,576.98 in Tokyo. The broader Topix index slipped 32.25, or 3.6 per cent, to 867.12.

Still, the Nikkei capped its best week on record, gaining 12 percent, and on Thursday had its fourth-biggest gain in history.

"Undoubtedly volatility has been increasing," said Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., which oversees about $61 billion in Tokyo.

"Compared with 10 years ago, highly leveraged money is dictating global financial markets, and once those funds start moving, fundamentals become irrelevant."

The Nikkei posted a 24 per cent drop in October, in which it recorded six of its 10 biggest moves, as governments announced $3 trillion in bailouts and central banks cut benchmark rates to ward off a recession. The Topix fell 18 per rent on the month, the most since September 1990.

For the week, the Nikkei 225 jumped 12 per cent, the biggest since Nikkei Inc. took over the benchmark from the Tokyo Stock Exchange in 1970.

Nikkei futures expiring in December fell 5.2 per cent to 8,560 in Osaka and slumped 5.4 per cent to 8,555 in Singapore.