TOKYO Japan's Nikkei average is poised to pare the previous day's gains and fall further on Thursday after the yen surged to a record high against the dollar and Wall Street erased its gains for the year on fears that Japan's nuclear crisis will slow the global economy.
Operators of a quake-crippled nuclear plant in Japan said they would try again on Thursday to use military helicopters to douse overheating reactors, as U.S. officials warned of a rising risk of a catastrophic radiation leak from spent fuel rods.
The yen reached 77.60 per U.S. dollar on the EBS trading platform, blowing through the April 1995 record of 79.75. Speculation that Japanese insurers will have to repatriate yen home to pay for claims was viewed as the main reason for the move.
The Nikkei climbed 5.7 percent to 9,093.72 points on Wednesday .N225 after having plunged 10.6 percent the day before, but was still down about 11 percent from Friday's close.
"Falls in global markets were sparked by fears that Japan may hurt the global economy, so sentiment is very weak," said Kazuhiro Takahashi, general manager at Daiwa Securities Capital Markets in Tokyo.
"And of course we're all looking at the nuclear power plant," said Takahashi, adding that at the beginning of trade the Nikkei will likely fall toward the intraday low 8,227.63 hit on Tuesday.
Analysts were reluctant to give a trading range for the day as they predicted extremely volatile moves on the market, but said 8,300-8,700 could serve as a provisional one, saying a break below 8,000 could spark further aggressive selling.
The iShares MSCI Japan Index exchange traded fund, or EWJ (EWJ.P), closed down 3.8 percent. Nikkei futures traded in Chicago closed down 5.06 percent at 8,530, 470 points below the Osaka close.
Singapore-listed Nikkei futures last traded down nearly 5.1 percent.
Japanese government bond prices are expected to soar on the yen's sharp gains. June JGB futures are expected to rise above 140, from Wednesday's close of 139.72, market players said.
(Reporting by Antoni Slodkowski; Editing by Chris Gallagher)