Nikkei slides to 1-week low as Greek crisis batters global markets
* Contagion to Europe's other regions could be risk - trader * Nikkei may dip below 20,000 this week, but such dip may create buying opportunities - analyst By Ayai Tomisawa TOKYO, June 29 (Reuters) - Japan's Nikkei share average slipped to a one-week low as risks of Greece defaulting on its debt repayment this week spiked dramatically, forcing Athens to impose capital controls to halt bank runs. After bailout talks between the leftwing government and foreign lenders broke down at the weekend, the European Central Bank froze vital funding support to Greece's banks, leaving Athens with little choice but to shut down the system to keep the banks from collapsing. The fear of contagion prompted investors to unload riskier assets such as stocks, dragging down all of the Topix's 33 subsectors. The Nikkei share average dropped 2.0 percent to 20,295.56 in mid-morning trade after tumbling to as low as 20,190.08 earlier, the weakest since June 22. "There are two things to keep in mind. One is an emotional reaction to sell risk assets which is seen now, but this isn't so serious," said Kyoya Okazawa, head of global market at BNP Paribas. "The real risk is contagion to other regions such as Italy and Spain although it is less likely than the euro crisis before for now." He said that Europe is much less vulnerable to contagion than it was during the euro zone crisis. There are also few countries having similar political issues as Greece, he said. "As long as the Greek problem is contained within Greece, there should be no major impact (to the Japanese market)," Okazawa said. Financial shares tumbled, with Mitsubishi UFJ Financial Group and Mizuho Financial Group each falling 2,8 percent, while Nomura Holdings and Daiwa Securities Group dropped 2.3 percent and 3.0 percent, respectively. Exporters languished, with Toyota Motor Corp falling 1.9 percent and Honda Motor Co shedding 2.5 percent. Yoshinori Shigemi, a global market strategist at JPMorgan Asset Management, said that investors will likely stay risk averse until the planned Greek referendum this weekend. "The Nikkei is likely to stay weak, and it may dip below the 20,000-mark but it shouldn't fall sharply," Shigemi said, adding that such a dip may create buying opportunities in banks, which have attractive valuations. The broader Topix dropped 2.0 percent to 1,634.45 and the JPX-Nikkei Index 400 shed 1.9 percent to 14,741.43. (Editing by Shri Navaratnam)
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