Japan's government yesterday played down a steep drop in its equity markets as a sign of investor concern that "Abenomics" were failing to pull the country out of its deflationary malaise.

The Nikkei fell 5.2 per cent to a five-week low, leading a tumble in Asian stocks.

The benchmark has lost nearly 15 per cent over the past week, in a pullback from a spectacular rally over the past six months that was spurred by the prime minister Shinzo Abe's aggressive push for monetary expansion and other policies to tackle decades-long deflation. The Nikkei is still up more than 30 per cent from the start of the year.

Mr Abe said that sharp movements in the stock market are nothing more than a day-to-day financial phenomenon.

"It's natural that stocks will move randomly," Abe adviser Koichi Hamada said in Tokyo yesterday. "Excessive upward or downward moves can happen any time." The economy minister Akira Amari, who last week said there was "no need to be perturbed" by the May 23 tumble in stocks, yesterday said that the government's growth strategy is the most important of its three-pronged approach to reflating the economy.

Tokyo has emerged as one of the world's top-performing bourses after Mr Abe came to power in December with his pro-spending policies and prescription for aggressive central bank easing which pushed down the yen.

A weaker currency makes Japanese exporters more competitive overseas and inflates their repatriated foreign income which, in turn, tends to lift their shares.

A batch of economic data to be released today, including factory output, will be closely watched to see if Mr Abe's policy plans for the world's third-largest economy, dubbed Abenomics, are taking hold.

"The most important thing here is perception on the success or failure of Abenomics," said Derek Halpenny, an analyst at Bank of Tokyo-Mitsubishi UFJ in London, discussing the Nikkei's and yen's reversals over the past week. "The Abenomics trade has seen Nikkei [going] higher, yen weaker, and now we have seen the Nikkei come off, we have the first time where people are wondering what's next."

Before last week's reversal, the Nikkei had shot 84 per cent higher since November and 16 per cent since early May. Meanwhile, the yen had fallen about 28 per cent during the same period.

"The simple truth is this rally has come so far, so fast that a correction has been long overdue," said Kenichi Hirano, a market adviser at Tachibana Securities.

Investors, however, warned that it was too early to judge whether Abenomics will work.

"The US is slowing, China is not roaring, Europe is poor, the UK is struggling and Japan is yet to feel a genuine translation from early Abenomics," said Thomas Becket, the chief investment officer at Psigma IM.

Some say Japan's efforts to weaken the yen will hurt other Asian markets and could spark competitive devaluation elsewhere. "Beware currency wars," said Lee Robertson, the chief executive of Investment Quorum.

Meanwhile, Japan is set to announce a series of agreements with African countries to facilitate better access to their fuel and minerals amid intensifying competition with China to tap into the continent's natural resources.

The agreements will be reached during this weekend's African development conference, an event Japan hosts with heads of state from the continent every five years.

The focus of the latest staging of the event will be business and energy, as Japan looks, in particular, for new fuel sources to keep its economy running amid a widespread nuclear power shutdown following the 2011 Fukushima accident.

The Tokyo International Conference on African Development, the fifth meeting since its launch 20 years ago, will take place in Yokohama from tomorrow to Monday, attended by 51 of the continent's 54 nations, including 40 heads of state.

* with agencies