NS: Nikkei breaks three-day rally as investors lock in profits
TOKYO, Jan. 7 (Xinhua) -- Japan's 225-issue Nikkei Stock Average, following a day of directionless trading that saw Japan's key benchmark moving narrowly in and out of positive territory, closed down 0.46 percent on Thursday, as investors fear the market may have become overheated.
Japan's key benchmark Nikkei fell 49.70 points from Wednesday's15-month closing high to 10,681.66, as investors, awaiting key economic data from the U.S. due out on Friday, opted to lock in profits.
The broader Topix index of all First Section issues on the Tokyo Stock Exchange gained 0.72 point, or 0.08 percent, to 931.85.
"There are signs suggesting the market is overheating, and investors are waiting for the U.S. jobs data on Friday, with interest in these figures rising after mixed signals from data yesterday," said Takashi Ushio, head of the investment strategy division at Marusan Securities. "Still, there is no real change in sentiment."
Pervasive profit taking and a strengthening yen hit export-related issues that have recently buoyed the market, brokers said. The yen was trading at 92.15 against the dollar, above most exporters assumed rate of 91-yen meaning overseas profits are eroded when repatriated into the domestic currency.
Tech-issues weighed on the market Thursday with shares in Canon Inc., who make office automation equipment and are also the world's leading camera maker, slumping 2.5 percent to 3,930 yen, after Credit Suisse cut its rating on the stock to "neutral" from "outperform".
The brokerage also lowered its target price to 3,900 yen from 4,100 yen, saying it favors profit-taking in the stock for now, according to sources close to the matter.
Canon Inc., who generates almost 80 percent of its sales abroad, also had its rating cut by Merrill Lynch & Co. which further drove investors away from this issue.
Semiconductor maker Tokyo Electron Ltd. retreated 1.84 percent to 5,880 yen and chip-testing firm Advantest Corp. dropped 1.55 percent to close at 2,410 yen. Electric component maker Kyocera Corp. also ended the day in negative territory, shedding 0.71 percent to 8,320 yen.
Japan's automaker sector was hit by a weaker dollar and Toyota Motor Corp., the world's biggest carmaker who relies on North America for 31 percent of its global sales, lost 1.3 percent to 3,850 yen.
Other automakers weighed on the market Thursday with Honda Motor Co. Ltd. down 1.6 percent to 3,090 yen and Nissan Motor Co, Ltd. also closing in negative territory, dropping 1.13 percent to 790 yen.
Isuzu Motors Ltd., known for its production of light trucks, dropped 2.22 percent to close at 176 yen at 3 p.m.
Japan Airlines Corp. plummeted 7.14 percent to 78 yen as The Nikkei business daily said the struggling airline is likely to post a net loss of 13.3 billion U.S. dollars due to mounting restructuring charges.
As tech and exporter issues, along with the machinery sector dragged the market down on Thursday, consumer finance, banks and some commodity-related issues trimmed losses, brokers said.
There were broad scale buybacks in banking and other financial issues Thursday as market players believed the shares had been oversold, analysts indicated.
Among the megabanks, Mitsubishi UFJ Financial Group Inc. gained0.85 percent to 474 percent and Mitsui Sumitomo Financial Group Inc. added 0.81 percent to 2,496 yen. Mizuho Financial Group Inc. also closed up 1.72 percent at 177 yen.
Sumitomo Metal Mining Co. Ltd, a leading smelter, gained 1.5 percent to 1,467 yen and fellow smelter Dowa Holdings Co. Ltd. rose 1.5 percent to 543 yen. Mitsui Mining and smelting Co. Ltd. surged 5.26 percent to 260 yen and was a notable gainer on today's Nikkei.
Regarding the recent replacement of Finance Minister Hirohisa Fujii, who resigned due to failing health, by Deputy Prime Minister Naoto Kan, sources close to the matter have said that the situation is unlikely to affect the market in the near future.
However investors will be watching Kan closely as some critics have been vocal about his perceived inexperience with matters of finance and economics.
Trade was active on the Tokyo exchange's First section, with some 2.3 billion shares changing hands compared with last week's daily average of around 1.6 billion shares.
Advancing issues outnumbered declining ones by 853 to 669.
