Nikkei Falls On Weak Japan, China Data; Sensex Gains Marginally

Japan's Nikkei Stock Average fell Monday as investor confidence was weighed down by the rising concerns about the worsening global economic conditions following the disappointing data which showed the weakening Japanese business conditions and Chinese manufacturing activity.

Japan's Nikkei Stock Average was down 0.83 percent or 73.34 points to 8796.82. Among the major losers were Toray Industries Inc (3.90 percent), Teijin Ltd (3.66 percent) and Chiyoda Corp (3.29 percent).

Market sentiment turned negative as a report by the Bank of Japan indicated that the general business conditions in the manufacturing sector in Japan worsened in the quarter ending September indicating the country’s economy continued to be affected by the weakening of exports following the soft global demand. According to data released by the central bank Monday, the Tankan large manufacturing index  dropped to minus 3 in the quarter ending September down from minus 1 in the earlier three months.

Last month, Japan reported a rise in trade deficit in August compared to that in the previous month with a decrease in both exports and imports. The Finance Ministry data showed that the country recorded 754.1 billion yen ($9.62 billion) trade deficit in August, up from 517.4 billion yen deficit in July.

Japanese exports dropped 5.8 percent to 5.05 trillion yen from a year earlier, indicating the soft global demand. Imports fell 5.4 percent to 5.8 trillion yen showing the weak domestic demand.

There was a slump of 22.9 percent in exports to the European Union compared to the previous year. While exports to China dropped 9.9 percent, exports to the U.S. rose 10.3 percent. The continuing debt crisis in Europe and the strength of the Japanese yen have hurt the demand for exports, the key driver of Japan's economy.

Meanwhile, China's manufacturing activity in September continued to remain in the phase of contraction, increasing the concerns over a slowdown in the economic growth of the country. Data released by the China Federation of Logistics & Purchasing Monday showed that the Purchasing Managers' Index (PMI) rose to 49.8 in September up from 49.2 in August.

But the index remains in the area of contraction since the reading is below 50. The shrinking of the manufacturing activity would increase fears of the likelihood of a sharp retardation in the economy.

In China, Hong Kong and South Korea stock markets are closed Monday for holiday.

India's BSE Sensex marginally gained 0.09 percent or, 16.94 points, to 18779.68. Among the major gainers were Apollo Tyres (2.06 percent), Syndicate Bank (1.80 percent) and Infosys (1.61 percent).