(Reuters) – Japanese shares fell on Tuesday as workers struggled to contain the world’s worst nuclear crisis in decades, while the euro steadied after comments from the European Central Bank’s chief bolstered the view that it would raise interest rates soon.
Plutonium found in soil at the earthquake-stricken Fukushima nuclear plant added to anxiety over Japan’s protracted fight to prevent further radiation leaks.
Heightening the uncertainty for investors, some Japanese companies said there would be delays in reporting full-year financial results as they assessed the damage from the devastating quake and tsunami which hit the country’s northeast on March 11, and the impact of widespread power outages which are still preventing many firms from restarting production lines.
Shortages of key components made in Japan have forced some manufacturers, particularly auto makers, to cut back production in North America, Europe and parts of Asia.
Japan’s Nikkei fell 1.5 percent, while MSCI’s index of Asian shares outside Japan dipped 0.06 percent.
Shares of Fukushima’s operator Tokyo Electric Power (TEPCO) were untraded on a flood of sell orders on a newspaper report. The Yomiuri paper citing unidentified government sources said there is talk to temporarily nationalise the utility, which a top Japanese official denied.
“TEPCO is the ground zero of the problem,” said Adrian Foster, head of financial markets research Asia-Pacific at Rabobank International in Hong Kong. “This is disproportionately a Japan issue
A tepid session on Wall Street overnight reinforced investors’ aversion to piling back into riskier assets. Data showed U.S. consumers increased spending in February but much of the gain went to cover rising food and energy costs, giving the economy only a modest lift.
EURO FINDS FOOTING
In currency markets, the euro stabilised after ECB chief Jean-Claude Trichet said inflation in the euro zone was “durably” above the central bank’s target, reinforcing the view it will raise interest rates early next month. The move would boost the value of the single currency and returns on euro-denominated investments.
Still, the euro remained under pressure on the region’s festering sovereign debt problems and uncertainties stemming from Sunday’s loss of a key state election by Germany’s ruling party.
The euro last traded at $1.4075 , compared with $1.4078 late in New York on Monday. Early in the session, it was as high as $1.4088.
The yen firmed against the dollar as the discovery of plutonium leak at the Fukushima plant, together with the fighting in Libya and unrest in the Middle East, stoked some safe haven demand for the Japanese currency.
The dollar fell about 0.2 percent to 81.68 yen , moving further away from 82.00 — the March 18 high hit after the world’s major central banks intervened to stem the yen’s strength.
A steady euro fostered support for gold after losing ground on Monday. Spot gold was last $1,417.30 an ounce in tight-range trading, compared with $1,419.50 late in New York on Monday. It is 2 percent below the record high of $1,447.40 set on March 24.