Japanese shares fell sharply in Friday morning trading after an overnight plunge on Wall Street and as export-oriented issues were dragged down by a stronger yen. The Nikkei 225 Stock Average lost 251.66 points, or 2.51 per cent, to trade at 9,778.65 while the broader Topix index was down 20.76 points, or 2.31 per cent, at 877.39. The Nikkei plunged briefly below 9,700 for the first time in five and a half months amid concerns about Europe’s debt problems.

Wall Street on Thursday also saw its steepest one-day drop in stock benchmarks in more than a year amid signs of a slowing US economy and continued worries about the European Union’s debt crisis.

Japan’s economy relies heavily on the country’s exporters and those exporters rely heavily on the US and EU markets.

They also closely watch the value of the yen, which has been on the rise recently. A stronger local currency makes Japanese exports less competitive and erodes their overseas earnings when the revenues are repatriated. On currency markets at 9 am (0000 GMT), the dollar traded at 89.85—87 yen, down from Thursday’s 5 pm quote of 91.37—40 yen. The euro traded at 1.2535—1.2538 dollars, up from 1.2417—2420 dollars Thursday, and at 112.64—66 yen, down from 113.48—52 yen. In other economic developments, the Bank of Japan injected 1 trillion yen (11.1 billion dollars)into money markets in emergency operations to improve liquidity, the central bank said Friday morning.

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