Japan's Topix May Drop Below 950 on U.S. Turmoil, Nomura Says

By Patrick Rial and Toshiro Hasegawa

Sept. 30 (Bloomberg) -- Japan's Topix index could fall below 950 points, 16 percent below yesterday's close, after U.S. lawmakers rejected a $700 billion bank-rescue plan, according to Nomura Holdings Inc.

``The voting down of the relief package means that risks to the financial system have intensified,'' Seiichiro Iwasawa, Nomura's chief strategist in Tokyo, wrote in a note to clients today. ``Financial markets are breaking into crisis mode. There were hopes that the government would move swiftly to deal with the problem, but it's not happening.''

The Topix could fall below 950, Iwasawa said, after closing yesterday at 1,127.87. A reading of 950 would bring the gauge to its lowest level since August 2003. The Nikkei 225 Stock Average may slip under 10,000, 15 percent less than yesterday's close.

The U.S. House of Representatives yesterday rejected the rescue plan, sending the Standard & Poor's 500 Index to its worst slide since the 1987 ``Black Monday'' market crash.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net.