Nikkei inches down, investors await U.S. election result

Wed Nov 7, 2012 3:21am GMT

* Investor attention on U.S. fiscal cliff
    * Investors stay on sidelines before U.S. result
    * Nissan surges on hopes for growth in North America

    By Ayai Tomisawa
    TOKYO, Nov 7 (Reuters) - Japan's Nikkei share average edged
down on Wednesday despite gains in U.S. stocks as earlier
short-covering ran its course while investors awaited the
outcome of the U.S. presidential election.
    Traders said that in early trade, investors covered their
short positions from early this week encouraged by a rise in
U.S. stocks as investors looked forward to definitive U.S.
election results. They added that the market was looking forward
to a U.S. leader who can act decisively to avert the legislated
"fiscal cliff" of spending cuts and tax hikes.
    By the midday break, the Nikkei was down 0.1 percent
at 8,965.17 after rising to as high as 9,032.32 in early trade.
The broader Topix was flat at 745.11.
    Democrat President Barack Obama and Republican challenger
Mitt Romney are in a tight race as vote counts started in a few
states. Obama and Romney have been neck-and-neck since their
first debate in early October..
    "Now the market's attention is how the new U.S. leader will
deal with its fiscal policy," said Kenji Shiomura, a markets
analyst at Daiwa Securities, adding that the so-called fiscal
cliff is the biggest short-term threat to the global economy,
including the direction of Japanese stocks. 
    Unless a fractious Congress can move swiftly to reach a deal
after the U.S. elections on Tuesday, about $600 billion in
government spending cuts and higher taxes are set to kick in
from Jan. 1 and could push the U.S. economy back into recession.
   "If the United States fails to resolve the fiscal cliff it
would hit the U.S. economy hard as well as the world and the
Japanese economy, so each G20 country will urge the United
States to firmly deal with it," Bank of Japan Governor Masaaki
Shirakawa said before a meeting of Group of 20 finance ministers
and central bankers. 
    Analysts added that once the market prices in the U.S.
election result, the market will also likely move past the
impact from sour Japanese corporate earnings.
    "Investors will likely continue seeing a correlation between
the dollar-yen move and Japanese stocks as usual. In that sense,
U.S. fiscal policy, which determines the direction of the
dollar, is very important," said Hiroichi Nishi, general manager
at Nikko Cordial Securities. 
    Sumitomo Metal Mining Co Ltd climbed 5.8 percent to
1,087 yen, a one-month high, after the non-ferrous metal company
cut its full-year operating profit forecast to 73 billion yen,
slightly ahead of the market consensus of 72 billion yen. 
    J.P. Morgan raised its price target on Sumitomo Metal Mining
to 1,000 yen from 900 yen and kept its 'neutral' rating. 
    Nissan Motor Co surged 4.0 percent to 704 yen on
expectations of strong growth in sales in North America despite
cutting its full-year operating profit forecast below market
expectations. 
    Nomura Securities lifted its price target on the automaker
to 880 yen from 830 yen and reiterated its 'buy' rating.
    DeNA Co Ltd climbed 2.2 percent to 2,650 yen,
hitting its highest level in six weeks after the social gaming
company's first-half operating profit beat its own guidance.
    The benchmark Nikkei is up 6.0 percent this year, trailing a
13.6 percent rise in the U.S. S&P 500 and a 12.4 percent 
gain in the pan-European STOXX Europe 600 index.