Nikkei slips after 5-session rally; utility shares drop

Mon Jan 7, 2013 1:59am GMT

* Nikkei down 0.2 pct, Topix up 0.1 pct
    * Utilities fall on Nomura rating cuts
    * Foreigners place net buy orders for Japan stocks

    By Ayai Tomisawa
    TOKYO, Jan 7 (Reuters) - The Nikkei edged down on Monday
morning as profit-taking kicked in after a five-session winning
streak that had taken Japan's benchmark index to a 22-month
high, while utility shares led losses on brokerage rating
downgrades.
    Analysts said sentiment in the Japanese market remained
positive, underpinned by encouraging U.S. jobs data and
expectations of aggressive monetary stimulus under new Prime
Minister Shinzo Abe, which have weakened the yen and boosted
exporters' shares over the past two months. But they also noted
that a correction was no surprise with technical charts
signalling overbought levels.
    The Nikkei dropped 0.2 percent to 10,670.16 by
midmorning, after rising as high as 10,743.69 in early trade.
    "Investors have been carefully waiting for the timing to
take profits as they believed the market can't keep rising,"
said Yutaka Miura, a senior technical analyst at Mizuho
Securities.
    "If volume keeps up, the drop may not be sharp," he added.
    The Nikkei has risen about 23 percent since mid-November
when Abe started calling for aggressive easing, taking the
Nikkei deeper into "overbought" territory.
    Its 14-day relative strength index is at 81.89, far above 70
which is considered overbought and often indicates an imminent
adjustment.
    On Monday, foreign brokers placed net buy orders of 11.3
million shares, their largest net purchase since Dec. 17.
    Some exporters succumbed to profit-taking, with Canon Inc
 dropping 1.3 percent and Toshiba Corp shedding
1.1 percent.
    But others were still in demand, with Toyota Motor Corp
 adding 0.5 percent, Honda Motor Co gaining 1.1
percent and Sony Corp rising 0.4 percent.
    "Japanese shares will likely continue attracting buying as
the conditions are good for them," said Hiroichi Nishi, general
manager at SMBC Nikko Securities, adding that some investors
believe exporters' earnings will be better than expected.
    On Friday, the dollar climbed to a nearly 2-1/2 year peak
against the yen after the Federal Reserve flagged concerns about
the risks of its stimulative monetary policy.
    The dollar rose as high as 88.40 yen, according to
Reuters data, the highest since July 2010. A weaker yen lifts
exporters' overseas earnings when repatriated.
    But utility stocks tumbled, becoming the worst
sectoral performer after Nomura Securities cut its ratings on
some power utility companies. Kansai Electric Power Co 
tumbled 4 percent after Nomura cut its rating to "reduce" from
"neutral", saying there was unlikely to be changes in the
Nuclear Regulation Authority's stance on refusing to reopen
nuclear plants unless deemed safe.
    Kyushu Electric Power Co fell 2.9 percent after
Nomura cut its rating to "reduce" from "neutral".
    The broader Topix fell 0.1 percent to 887.57.
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