February 6, 2018 / 7:57 AM / 17 days ago

Japan stocks in biggest point drop since June 2016 after Wall Street selloff

* Topix turnover highest since May 2013

* Nikkei Volatility Index hits highest level since June 2016

* Immediate support seen at 200-day moving avg of 20,938 - analyst

* BOJ buys 73.1 bln yen worth of ETFs on Monday

By Ayai Tomisawa

TOKYO, Feb 6 (Reuters) - Japanese stocks suffered their biggest point drop since June 2016 on Tuesday, after Wall Street tumbled the previous day on fears about rising U.S. bond yields and a potential pick-up in inflation.

The Nikkei 225 share average ended down 4.73 percent at 21,610.24, marking the biggest percentage fall in 15 months and falling to its lowest close since Oct. 20.

In terms of index points, it was the biggest decline since June 2016.

The Nikkei Volatility Index jumped 52 percent to 31.02, after rising as high as 35.34 earlier, the highest point since June 2016.

The broader Topix dropped 4.4 percent to 1,743.41, with 3.16 billion shares changing hands, the largest volume since November 2016. Turnover jumped to 5.6 trillion yen, the highest since May 2013.

“The value of the yen has gone up which adds to volatility in Nikkei. It’s unfortunate for Japan. A higher yen sucks up the value in the Japanese stock market. It causes a double whammy,” said Shane Oliver, head of investment strategy, AMP Capital. “As share market sentiment turns negative, the value of yen goes up which is bad for the country’s exporters. The Nikkei will underperform further from here.”

The dollar fell 0.3 percent to 108.73 yen, stoking fears about Japanese companies’ earnings.

The Nikkei’s tumble on Tuesday came after the S&P 500 and Dow Industrials indexes slumped more than 4 percent on Monday, marking the biggest single-day percentage drops since August 2011. At one point, the Dow had its biggest intra-day fall ever, but it closed off those lows.

The rout reverberated through the Japanese market, which hit a 26-year peak last month, buoyed by last year’s re-election of Prime Minister Shinzo Abe, firm global growth and strong earnings expectations by local companies.

“Investors are now unwinding their risk positions,” said Takuya Takahashi, strategist at Daiwa Securities. “People are pulling out of risk assets now, and at this point we don’t know if this is temporary or not.”

Takahashi added that the Nikkei’s immediate support is seen at its 200-day moving average of 20,938.

All of the Topix’s 33 subsectors were in the red, with index-heavyweight stocks underperforming in particular.

SoftBank Corp stumbled 4.9 percent and Fast Retailing shed 5.5 percent.

Exporters also lost ground. Yaskawa Electric dived 7.7 percent and Nintendo Co tumbled 5.2 percent.

Market participants expected that the Bank Of Japan would buy exchange-traded funds on Tuesday to support the market.

The BOJ bought 73.1 billion yen ($672 million) of ETFs on Monday. ($1 = 108.8400 yen) (Additional reporting by Swati Pandey in Sydney; Editing by Jacqueline Wong)

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