Nikkei Dives On Slowdown Fears

Tokyo's benchmark Nikkei-225 index dived more than three per cent in morning trade on Monday, as fears grew over a global economic slowdown.

At about 10am Tokyo time, the Nikkei was down 3.15 per cent, or 682 points, at 20,945, after it opened down more than two percent.

US stocks dropped after the closely watched yield curve flashed a warning sign that a recession could be looming.

The yield curve, which tracks the spread between short- and long-term rates on US Treasury bonds, briefly inverted on Friday, with yields on three-month bonds falling below those for 10-year notes – the first time this had happened since before the global financial crisis in 2007.

The yield curve has inverted prior to all recessions in recent decades.

This happened as "concerns grow over the global economic downturn," Tsuyoshi Nomaguchi, strategist at Daiwa Securities, said in a commentary.

The Japanese market is also being weighed by weakness in exports to China, he added.

Japanese exports bound for China in the January-February period "have not recovered to the level seen a year earlier," and orders for industrial machines remain weak, he said.

Investors are awaiting a series of data releases this week, including US housing starts for February on Tuesday and Japan's factory output for February due on Friday, he added. (AFP)