Tokyo shares sink to 3-year low as investors worry over virus

* Topix at lowest since Nov 2018, falls into bear market
* BOJ's stock portfolio suffers losses for 1st time
* Markets to remain sensitive to virus-related news: fund
manager

By Tomo Uetake
SYDNEY, March 11 (Reuters) - Japan's Topix share index fell
to its lowest level in more than three years on Wednesday as
investors worried about the global economic impact of the fast
spreading coronavirus.
The broader Topix .TOPX shed 1.5% to 1,385.12 points, its
lowest close since November 2018, reversing course after rising
as much as 1.1% in the morning.
The index slid 20.7% from its recent high of 1,747.20,
marked in December, putting it in bear market territory.
The benchmark Nikkei average .N225 lost 2.3% to 19,416.06,
a near 15-month low, after brief gains in the morning.
The Nikkei's volatility index .JNIV , a measure of
investors' volatility expectations based on option pricing,
remained elevated at 47.09, not far from a 4-year peak of 48.89
brushed on Monday.
The Nikkei also broke below the estimated average cost of
the Bank of Japan's stock purchases around 19,500, raising
concerns about the central bank's credibility and the
sustainability of its hyper-easy monetary policy.
Shares of the BOJ 8301.T , which are majority-owned by the
government but are listed in the Tokyo Exchange, tumbled 3.5% to
a lifetime low on Wednesday.
U.S. President Donald Trump said on Tuesday he would take
major steps to ease economic strains caused by the spread of the
flu-like virus. Headlines focused on discussions of payroll tax
cuts, which helped lift market sentiment. However, the lack of major announcements since then has left
some investors unimpressed.
All but five of the 33 sector sub-indexes on the Tokyo Stock
Exchange traded lower, services .ISVCS.T , real estate
.IRLTY.T and pharmaceutical .IPHAM.T being the worst three
performing sectors.
In the United States, the Centers for Disease Control and
Prevention reported on Tuesday 696 cases of coronavirus, an
increase of 224 from its previous count, and said the number of
deaths had risen by six to 25. "We expect financial markets to remain very sensitive to
incoming coronavirus-related headlines from the U.S. and Europe
over coming days," said Takashi Maruyama, head of equities at
Fidelity International (FIL) Japan.
"Once bond markets stabilise, that should help to gradually
steady stock markets too."
As U.S. Treasury yields rose from all-time lows overnight,
rate-sensitive financial names in Tokyo outperformed.
Mitsubishi UFJ Financial Group Inc 8306.T and Mizuho
Financial Group Inc 8411.T gained 0.7% and 1.0%, respectively,
while Dai-ichi Life Holdings Inc 8750.T and T&D Holdings
8795.T added 0.5% and 0.8%, in that order.
Elsewhere, amusement park operators Oriental Land Co Ltd
4661.T and Sanrio Co Ltd 8136.T lost 4.3% and 2.4%,
respectively, as both companies decided to extend their park
closures amid worries about the coronavirus.