TOKYO (Thomson Financial) - Japanese shares are expected to open lower Monday, with investors discouraged by losses on Wall Street on Friday after a slew of weak economic data revived concerns about the US economy.
The New York Fed's Empire State index of factory activity plunged almost 21 points to a negative 11.7 reading, the weakest level in almost three years. Readings below zero show shrinkage.
February also marked the fourth straight decline for the index. Economists had expected a much healthier reading of 5.75, according to Thomson/IFR.
Separately, the Reuters/University of Michigan's consumer sentiment index dropped to 69.6 this month, its worst level since 1992 and down sharply from 78.4 in January.
'In addition to concerns about the US economy, concerns about rises in writedowns and losses at European financial institutions stemming from the subprime loan crisis are likely to weigh on the market,' Mizuho Research Institute senior economist Koji Takeuchi said in a note to clients.
'There is also lingering anxiety about bond insurers despite ongoing discussions about a rescue plan,' he said.
One of the wobbly bond insurers, FGIC Co, agreed to be split into two separate entities. One would house its structured finance business where its troubled subprime assets are sheltered. The other would contain the municipal bonds that FGIC backs which normally are considered desirable.
The Dow Jones Industrial Average closed down 28.77 points or 0.2 percent at 12,348.21 on Friday, while the Nasdaq index fell 10.74 points or 0.5 percent to 2,321.80.
On the Tokyo bourse, the blue-chip Nikkei 225 Stock Index ended 3.89 points lower at 13,622.56, while the broader Topix rose 2.45 points or 0.2 percent to 1,334.89.
The Chicago-traded Nikkei futures contract settled at 13,575 points, down from 13,670 at the Osaka Securities Exchange on Friday and suggesting a weak start for the market.
Today, the labour ministry will release its monthly labour survey for December, while the Cabinet Office will report revised diffusion indexes of economic indicators for December.
Stocks to watch include Toshiba Corp on a weekend report that the electronics giant is expected to virtually withdraw from the HD-DVD business, marking the end of the long battle over next-generation DVD formats between Toshiba and the Blu-ray camp led by Sony Corp.
(1 US dollar = 107.79 yen)
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