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* Insurers and banks fall on the inversion of the yield curve of the US Treasury
* Eisai falls again to the daily low limit
* All 33 sub-sectors of Topix in the red
By Daniel Leussink and Ayai Tomisawa
TOKYO, March 25 (Reuters) – Japan's Nikkei on Monday recorded the biggest daily drop in the last three months, as investors now opt for bonds and other badets considered safe against renewed fears of a sharp downturn. a global economic slowdown.
The Nikkei's average price fell 3% to 20,977.11, the lowest level since mid-February and the biggest daily drop since the end of December.
The broader Topix fell 2.5% to a two-week low of 1,577.41, with all of its 33 subsectors trading in negative territory.
On Friday, for the first time since 2007, the spread between US three-month Treasury bill yields was higher than the 10-year yield spread.
The reversal of the Treasury yield curve has suggested that the world's largest economy could sink into recession and rekindle fears of a slowing global economy.
Japanese insurers and banks, looking for higher-yielding products such as US bonds, sold significantly on Monday, which was weighed down by the reversal of part of the US yield curve.
Dai-ichi Life Holdings lost 3%, T & D Holdings, 2.7% and Tokio Marine Holdings, 1.4%.
"Insurers react negatively because it makes it harder for them to manage their badets," said Eiji Kinouchi, chief technical badyst at Daiwa Securities.
Banks were also down, with a 3% decline for Mitsubishi UFJ Financial Group and a 1.1% reduction for Mizuho Financial Group.
Shares of companies relatively sensitive to the global economic outlook, such as manufacturers of factory automation equipment, lost ground on Monday.
Fanuc fell by 3.8% while Keyence, a heavyweight in the index, yielded 1.2%.
Kinouchi, of Daiwa, said companies that are relatively sensitive to the global outlook could recover from vigorous stimulus measures in China, as many had done after a sale in December.
The heavyweight group SoftBank Index fell by 5%.
The drug sector remained in the spotlight with a decline of 3.9%.
Drug maker Eisai Co. plunged 19.83% to a daily low of 6 065 yen after the company and partner Biogen Inc. announced last week that they had dropped trials of an experimental drug for Alzheimer's disease .
The news weighed on other pharmaceutical names for a second session, with Astellas Pharmaceutical down 3.8% and Takeda Pharmaceutical down 2.5%. (Report by Daniel Leussink and Ayai Tomisawa, edited by Simon Cameron-Moore)
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