TOKYO (Thomson Financial) - Japanese shares may open lower Monday in the wake of steep losses posted on Wall Street Friday when major US banks warned of further losses from their debt portfolios.
Bank of America Corp, JPMorgan Chase & Co and Wachovia Corp all said the ongoing credit crisis will cause another round of heavy losses during the fourth quarter.
Bank of America said continued 'market dislocations,' including those related to securities it owns backed by loans, will affect its fourth quarter results.
Wachovia, the nation's fourth-largest bank, said it faced a 1.1 billion US dollar writedown for October alone.
In addition, concerns about the US economy may weigh on sentiment after the University of Michigan's preliminary November consumer sentiment index showed its weakest performance since October 2005.
'Increased instability on financial markets will also make it harder for the Bank of Japan to hike interest rates any time soon,' Goldman Sachs Securities chief economist Tetsufumi Yamakawa said.
The Bank of Japan starts its two-day policy board meeting today.
The yen's strength will weigh on the market after the Japanese reached 110.70 yen against the dollar -- a level not seen in nearly one and a half years.
Japanese investors will also pay close attention to upcoming economic data, including consumer sentiment figures today and real GDP data on Tuesday.
'Forthcoming economic data may underscore the emerging downside risk of Japanese private demand, which will make the Japanese economy more sensitive to external shocks such as the the subprime loan crisis,' Yamakawa said.
On Wall Street Friday, the Dow Jones Industrial Average closed down 223.55 points or 1.69 percent to 13,042.74, while the Nasdaq composite index tumbled 68.06 points or 2.52 percent to 2,627.94.
The Chicago-traded Nikkei futures contract settled at 15,255 points, down from 15,470 on the Osaka Securities Exchange on Friday, suggesting a weak start for the market.
On the Tokyo bourse, the blue-chip Nikkei 225 Stock Average closed down 188.15 points or 1.2 percent at 15,583.42, its weakest close since August 17 when it finished at 15,273.68.
The broader TOPIX index declined 22.59 points or 1.5 percent to 1,494.35.
Ahead today, the Ministry of Finance is due to release preliminary current account surplus data 10 minutes before the opening bell, while the Bank of Japan's corporate price index for October is due out at the same time.
Teikoku Databank is set to announce corporate bankruptcies for October in the afternoon and the Cabinet Office is due to release consumer sentiment data for October.
Isuzu Motors will release its first half to September results.
Stocks to watch include Japan's Sega Sammy Holdings Inc after the company reported Friday a net loss of 20.27 billion yen in the fiscal first half to September due to sluggish sales of gaming machines amid intensified competition.
The holding company for video game publisher Sega, known for its 'Sonic the Hedgehog' game, also lowered its guidance for the rest of the year and announced measures aimed at restoring profitability.
(1 US dollar = 110.67 yen)
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