Tokyo shares open lower on Turkey crisis

Tokyo stocks opened lower on Monday as investors watched tension between the US and Turkey that has driven down the lira, fanning fears of possible wider financial instability.

The benchmark Nikkei 225 index fell 0.83% to 22 112.2 while the broader Topix index gave up 0.83% to 1 705.94.

The Turkish lira fell to a new record low of 7.2362 to the dollar overnight, before recovering to around 6.8222 in Asian trading, similar to its trading price on Friday.

Experts said Tokyo trade would be under pressure with investors worried about the possibility of contagion from Turkey.

"The dominating theme of this week is likely to be the Turkish situation," Okasan Online Securities said in a note to clients.

"The 'Turkey shock' from last weekend, triggered by sharp plunges of the lira, has fuelled fears that it may impact financial institutions in Europe," it said.

The Turkish lira began its plunge last week on the nation's rising tensions with US President Donald Trump, who is demanding the release of an American pastor held in Turkey and has doubled steel and aluminium tariffs on the country.

President Recep Tayyip Erdogan has responded with defiance, describing the crash as a "political plot" against Turkey.

Okasan said investors would also be looking to Chinese economic data, including retail sales and industrial production, as Washington stokes trade tensions with Beijing.

But solid quarterly earnings from many firms would support Tokyo trade, the brokerage said.

The dollar was at ¥110.68, slightly off from ¥110.88 seen on Friday in New York.

Among major shares, Toyota dropped 1.09% to ¥6 875, while Sony fell 1.52% to ¥5 959.

Mitsubishi UFJ Financial Group gave up 2.57% to ¥652.3, while Mizuho Financial Group lost 1.64% to ¥191.8.