TOKYO, Dec 14 — Japanese stocks fell, with the Topix index heading for its lowest close in almost two months, as a rout in US and European equities on Friday spread to Asia. Energy explorers led declines.

The Topix index dropped 2.1 per cent to 1,517.48 as of 9:18 a.m., heading for its lowest close since Oct. 20, as all but one of its 33 industry groups declined. The Nikkei 225 Stock Average lost 2.4 per cent to 18,774.93. US and European stocks slumped at the end of last week as a rout in oil prices and ructions in the junk-bond market boosted investor anxiety ahead of the Federal Reserve’s final meeting of 2015.

“Sentiment at the moment is pretty weak,” said Matthew Sherwood, head of investment strategy at Perpetual Ltd. in Sydney, which manages about US$21 billion (RM 91.078 billion).

“We’re coming up to the first US rate hike in nine years and we have an environment in commodities where prices continue to decline. The recoveries in Europe and Japan just haven’t taken off. The US looks solid enough but it’s still the weakest recovery in history.”

Toyota Motor Corp., Mitsubishi UFJ Financial Group Inc. and Honda Motor Co. were the biggest drags on the Topix. Inpex Corp. slumped 3.1 per cent as oil explorers fell the most among the Topix industry groups. Brokerage Nomura Holdings Inc. lost 3.5 per cent, the most since Sept. 29.

US Futures

E-mini futures on the Standard & Poor’s 500 Index added 0.1 per cent after the underlying measure dropped 1.9 per cent on Friday to cap the worst week for US stocks since August. The Stoxx Europe 600 Index fell 2 per cent.

A wave of risk aversion swept over markets Friday as OPEC’s decision to scrap output limits sent crude oil prices to the lowest level since 2008 in London. Asset managers slid in the US after a high-yield mutual fund run by Third Avenue Management suspended redemptions. They were then joined by Stone Lion Capital Partners, fueling concern over stress in the high- risk debt market.

The credit-market turmoil comes as traders price in 74 per cent odds that the Fed will raise interest rates on Wednesday, ending the era of near-zero borrowing costs. Tightening policy would solidify the Fed’s divergence from other major central banks, with policy makers in Europe and Japan still emphasizing measures to support growth.

The Bank of Japan’s fourth-quarter Tankan survey showed a measure of confidence among large manufacturers held at 12, beating economist estimates for it to slip to 11. 

The index is forecast to fall to seven in March. 

A positive number means there are more optimists than pessimists among manufacturers. — Bloomberg