TOKYO (AFP) - Tokyo stocks fell more than one per cent in early trade Monday after official data showed Japan's economy dropped into a recession, missing expectations for a positive figure and dealing a huge blow to Tokyo's growth blitz.
The Nikkei 225 index at the Tokyo Stock Exchange, which closed at its highest level in more than seven years on Friday, was down 192.98 points at 17,297.85 in the first 30 minutes of trading.
Official data released just before the market opened showed Japan's economy dropped into a recession after a second-straight quarter of contraction.
The country's gross domestic product shrank 0.4 per cent in the July-September quarter, or an annualised rate of 1.6 per cent, as a tax rise earlier this year slammed the brakes on growth.
The news briefly sent the US dollar above 117 yen before the greenback settled at 116.46 yen, still up from 116.26 yen in New York Friday afternoon.
The negative data came amid speculation that Prime Minister Shinzo Abe may put off a second tax increase planned for next year.
It is expected to provide the catalyst for Abe to rule out the tax rise and call a snap election to seek a new popular mandate.
US stocks were little-changed Friday but the S&P 500 picked up enough for a new record as a possible Halliburton-Baker Hughes merger sparked buying in the oil services sector.
The Dow Jones Industrial Average finished down 0.10 per cent while the broad-market S&P 500 added 0.02 per cent at 2,039.82.