Japanese stocks tumbled to a more than one-week low on Wednesday morning, as political uncertainty in Greece spooked world markets already under strain from a slide in crude oil prices and worries over global growth. The resulting flight to safety drove the yen higher and took a toll on exporters.

The Nikkei benchmark dropped 1.5 per cent to 17,542.67 in mid-morning trade after falling to as low as 17,518.05 earlier, the lowest since December 2.

Traders said the benchmark should be supported by its 25-day moving average of 17,378 for now on hopes that the Bank of Japan would buy exchange traded funds, or ETFs, when the market falls.

On Monday and Tuesday, the central bank had bought a combined ¥74.8 billion worth of ETFs and ¥1.3 billion worth J-REITs.

Brent crude was down 1.6 per cent to $65.78 during Asian trade after hitting a fresh five-year low of $65.29 the previous day. Oil prices have been under pressure amid a massive supply glut, after OPEC decided against an output cut.

Greece bailout

European political woes added to the anxiety, after the government in Athens brought forward a presidential vote that heightened uncertainty over the country’s transition out of its IMF/EU bailout.

“Market euphoria over the recent positive news is fading out for now as investors shift to risk-averse from risk-taking,’’ said Hiroyuki Nakai, chief strategist at Tokai Tokyo Research Center.

BoJ stimulus

The Nikkei has gained 12 per cent since the BoJ’s surprise easing on October 31.

“People started to look at the negative effect that weak oil prices would have on developers in the world and how that would affect the global economy,’’ Nakai said.

China’s consumer inflation

China’s latest inflation report did little to help sentiment, with data showing its annual consumer inflation eased to a five-year low of 1.4 per cent in November from 1.6 per cent in October.

Exporters down

Exporters dropped, with Fanuc Corp shedding 2.3 per cent and Toyota Motor Corp falling 2.5 per cent. The dollar slid to 119.68 yen, having dropped more than 2 per cent at one stage to 117.90 in a vicious turnaround from a seven-year peak of 121.86 set on Monday.

Bucking the market, Skymark Airlines soared 12 per cent to ¥258 yen, the highest since November 25 after ANA Holdings Inc said it would consider helping struggling Skymark. The broader Topix dropped 1.4 per cent to 1,416.19, and the JPX-Nikkei Index 400 slid 1.5 per cent to 12,850.49.

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