Tokyo's Nikkei index down more than 3% in late trade

TOKYO (AFP) - Tokyo stocks tumbled more than 3 per cent on Tuesday afternoon, hit by a stronger yen and tracking heavy losses on Wall Street after weaker-than-expected US jobs data.

The benchmark Nikkei-225 index fell 3.22 per cent, or 512.90 points, to 15,399.16 by 2pm.

On Friday, the United States Labour Department said the world's biggest economy added a mere 74,000 jobs in December, well below the consensus estimate of 197,000. The news fuelled speculation the Federal Reserve will delay a further reduction in its stimulus programme, a negative for the dollar.

Japan's markets were closed on Monday for a national holiday.

"The jobs data came in so far below expectations that a sharp knee-jerk market reaction is natural, especially considering how far the dollar has fallen," said Monex market analyst Toshiyuki Kanayama.

The dollar was changing hands at 103.33 yen on Tuesday afternoon, up from 102.98 yen in New York on Monday afternoon, but still sharply down from levels near 105 yen in Tokyo on Friday.

"The selling is unlikely to have a long-lasting effect on market sentiment, but could lead to a more thorough shakeout of what has been a very bullish two-month period," Mr Kanayama told Dow Jones Newswires.

The Nikkei posted a strong run in the last couple months of 2013 as it surged 57 per cent through the year - its best annual performance since 1972.

On Wall Street on Monday the Dow fell 1.09 per cent, the S&P 500 shed 1.26 per cent and the Nasdaq lost 1.47 per cent.

Adding to the downward pressure on Japanese stocks was news that the country's current account deficit widened to a record US$5.7 billion (S$7.21 billion) in November, owing to a weak yen pushing up the country's energy import bills.

Japan's has since 2011 had to depend on importing pricey fossil fuels to generate electricity, after the country's nuclear reactors were shut down in response to the 2011 tsunami-sparked Fukushima atomic disaster.

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