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By Joshua Hunt
TOKYO, April 28 (Reuters) - Japanese stocks gave up early gains and took a u-turn that wiped out much of the previous week’s four-day rally in a single afternoon after the Bank of Japan disappointed investors by holding off on expanding monetary stimulus.
The Nikkei share average shed 3.6 percent to end the day at 16,666.05, resulting in a 5.1 percent decline for the shortened trading week, with the market closed for a national holiday on Friday.
The yen soared against the dollar and the euro after the BOJ’s announcement, adding to the discomfort of Japanese exporters.
“The market had clearly worked itself into a frenzy of expectations demanding that the BOJ take action, and in retrospect that looks like a misguided view that failed to recognise the dilemma that recent economic dynamics have presented for the BOJ,” said Stefan Worrall, director of Japan equity sales at Credit Suisse.
Shares of Kyushu-based banks fell along with a broad swath of financial shares, shrugging off a 300 billion yen ($2.76 billion) zero-interest loan program announced by the BOJ as a salve for commercial banks in quake-hit areas. Marcel Thieliant, senior Japan economist at research consultancy firm Capital Economics, said in a note that the loan amount was “absurdly small.”
Kyushu Financial Group tumbled 6.6 percent while Fukuoka Financial Group plunged 8.3 percent, while the broader banking sector shed 6.3 percent.
Manufacturing automation giant Fanuc Corp slid 9.9 percent after reporting disappointing earnings, while Nintendo Co Ltd fell 8.3 percent on weak earnings, outlook and plans to sell its majority stake in the Seattle Mariners Major League Baseball team.
The broader Topix fell 3.2 percent to end the day at 1,340.55 with each of its 33 subindexes in negative territory. The index ended the week about 4.8 percent lower.
The JPX-Nikkei Index 400 declined 3.3 percent to 12,124.68. ($1 = 108.8500 yen) (Reporting by Joshua Hunt; Editing by Simon Cameron-Moore)