Nikkei Closes at Lowest Year-End Level Since 1982

Japan's headline Nikkei-225 index Friday finished 2011 at its lowest year-end level for almost three decades, with analysts warning the outlook for the New Year remains poor.

The Nikkei index of the Tokyo Stock Exchange shut up shop at 8,455.35, down 17.34 percent, or 1,773.57 points, from the 2010 close of 10,228.92, with the March 11 earthquake and tsunami taking its toll on share prices.

It was the worst year-end figure since 1982, when the index saw out December at 8,016.67.

On the day, the benchmark index closed up 56.46 points or 0.67 percent from the previous day.

The Topix index of all first section issues closed the day's session 0.90 percent or 6.49 points higher at 728.61. It fell 170.19 points over the year, or 18.94 percent, from the 2010 close at 898.80.

"There were a few times when the Nikkei index recovered to 9,000-10,000 after the disaster, but it didn't hold at those levels too long," Daisuke Uno, chief market strategist of Sumitomo Mitsui Banking Corp., told Agence France Presse.

"The Tokyo stock market has had a weak year, falling about 2,000 points since the beginning of the year," he said.

Tokyo shares, which had ended above the 10,400 level on the day before the earthquake disaster, plummeted to 8,605.15 on March 15, as Japan was gripped by the worst nuclear disaster the world has seen since Chernobyl.

Investors are not optimistic about the coming year, with the Eurozone sovereign debt crisis expected to continue dragging on the global economy.

"As the year 2012 begins, market participants will likely be reminded that the European fiscal problems continue to worsen," Dai-ichi Life Research Institute chief economist Yoshikiyo Shimamine told Dow Jones Newswires.

"The market's focus, whether willing or not, will be on Europe at the beginning of the New Year, as rating companies are expected to announce results of their reviews on Eurozone nations," he added.

Japan's industrial sector struggled in 2011 even after getting back on its feet from the tsunami, when flooding in Thailand submerged factories and disrupted supply chains.

But Sumitomo's Uno also said: "The main factor really affecting the market has been the European debt crisis while the US economic trend has also changed and started slowing.

"Next year, I think the market focus will shift from Europe to the United States and China.

"The US economy faces fiscal challenges while emerging economies will face a risk of bubble bursting and markets shrinking," Uno said, forecasting the Nikkei to trade in a range between 7,500 and 9,000.

At the year-end of 1989, at the height of Japan's booming economy, the Nikkei closed at 38,915.87.

Japan's export-reliant economy has also suffered from a soaring yen, which hit a fresh post-war high of 75.32 against the dollar in October. A high yen makes Japanese products more expensive overseas and erodes repatriated profits for manufacturers.

The euro also is losing ground against the Japanese unit, renewing new 10-year-lows.

The euro eased to $1.2915 and 100.27 yen in late Tokyo trade from $1.2960 and 100.61 yen in New York Thursday. The dollar was flat at 77.52 yen.

Uno said the Japanese currency was likely to remain a safe haven for global investors.