Shrinking economy plummets Tokyo stocks

TOKYO -- Japanese stocks tumbled Friday on news of a shrinking Japanese economy and renewed pessimism about recovery prospects in the United States. The dollar held steady against the yen.

The benchmark 225-issue Nikkei Stock Average closed down 133.54 points, or 1.25 percent, to 10,516.79 after losing as much as 2 percent earlier in the session. On Thursday, the average closed up 51.54 points, or 0.49 percent.

The dollar bought 121.21 yen at 5 p.m. (4 a.m. EDT), unchanged from late Thursday in Tokyo but above its overnight New York level of 121.08 yen. The dollar ranged from 120.72 yen to 121.33 yen.

On the stock market, the Nikkei's losses were fueled by the release of government data that showed Japan's economy shrank 0.8 percent for the April-June quarter, confirming growing fears about an economy in decline.

Spurring the losses were worries that U.S. unemployment data, to be released later in the day, would undermine the consumer spending that has powered the U.S. economy.

The Nikkei's initial slide cued off a falling Dow Jones industrial average, which shed 192.43 points to end at 9,840.84 at Thursday's close. The Nasdaq composite index closed at 1,705.64, down 53.37.

In Japan, the backsliding gross domestic product -- the value of all goods and services produced in the country -- indicated that the global slowdown had dealt a serious blow to Japan, which is struggling to dig itself out of a 10-year economic slowdown.

The Japanese economy posted a mere 0.1 percent growth in the January-March quarter after growing 0.6 percent in the three months ending in December last year. It contracted 0.7 percent in the quarter through September 2000.