Tokyo stocks fell Thursday as turmoil surrounding major Swiss bank Credit Suisse stirred concern that problems in the U.S. financial system, caused by the collapse of two regional banks, could spread to Europe.

The 225-issue Nikkei Stock Average ended down 218.87 points, or 0.80 percent, from Wednesday at 27,010.61. The broader Topix index finished 23.02 points, or 1.17 percent, lower at 1,937.10.

All industry categories except information and communication issues declined, led by bank, insurance, and iron and steel shares.

A financial data screen in Tokyo shows the 225-issue Nikkei Stock Average fall below 27,000 points on March 16, 2023.(Kyodo) 

The U.S. dollar remained weak around the 133 yen line in Tokyo after falling in London the previous day as investors fled to the perceived safety of the Japanese currency amid concern about the financial systems in the United States and Europe, dealers said.

At 5 p.m., the dollar fetched 133.10-13 yen compared with 133.42-52 yen in New York and 134.86-89 yen in Tokyo at 5 p.m. Wednesday.

The euro was quoted at $1.0625-0626 and 141.43-47 yen against $1.0573-0583 and 141.06-16 yen in New York, and $1.0737-0738 and 144.81-85 yen in Tokyo late Wednesday afternoon.

The yield on the benchmark 10-year Japanese government bond fell 0.035 percentage point from Wednesday's close to 0.285 percent.

Stocks dropped throughout the day, led by bank-related issues, after Credit Suisse's share price briefly plummeted by more than 30 percent on the Swiss stock exchange Wednesday following an announcement by the bank that it had found "material weakness" in its financial reporting in previous years.

The news raised fears about the European financial system amid lingering caution over the U.S. banking sector following the recent collapse of tech-focused lender Silicon Valley Bank and Signature Bank, a big lender in the crypto space, analysts said.

Stocks trimmed some earlier losses after Credit Suisse announced it will borrow up to 50 billion francs ($54 billion) from the Swiss central bank to shore up its finances.

"There is a possibility that some Japanese banks might be affected by the troubles of the major bank, although we have yet to see the whole picture," such as the amount of credit extended to the Swiss bank by Japanese banks, said Masahiro Yamaguchi, head of investment research at SMBC Trust Bank.

"Still, at this moment, we don't have to think about the collapse of Credit Suisse and it leading to the failure of Japanese banks," he added.

In the banking sector, Mizuho Financial Group plunged 72.0 yen, or 3.8 percent, to 1,832.5 yen and Mitsubishi UFJ Financial Group dived 23.9 yen, or 2.8 percent, to 837.6 yen.

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