Nikkei retreats from 52-month high; financials, exporters weigh

Thu Feb 21, 2013 7:54am GMT

* Construction equipment makers down on weak Caterpillar
sales
    * GS Yuasa jumps on hopes of 787 battery issue being
resolved
    * Small cap stocks outperform
    * Pension fund report on investment in Japan stocks curb
losses

    By Tomo Uetake
    TOKYO, Feb 21 (Reuters) - Japan's Nikkei share average fell
on Thursday as financials and  exporters dropped, tugging the
market below a 52-month high hit the previous day, with
investors' risk appetite also dampened by declines in U.S.
shares.
    The Nikkei closed 1.4 percent lower at 11,309.13
after rising to 11,468.28, marking its highest closing level
since late September 2008.
    Financials were sold-off. Mitsubishi UFJ Financial Group
 fell 2.4 percent, Sumitomo Mitsui Financial Group
 shed 2.8%, while Mizuho Financial Group and 
Nomura Holdings Inc declined 2.0 percent each. They
were among the top six most actively traded stocks by turnover
on the main board.
    Global risk appetite was undermined after minutes from the
U.S. Federal Reserve's last meeting suggested the possibility of
an earlier-than-expected end to the super-accommodative U.S.
monetary easing scheme. Wall Street stocks fell on the minutes,
as did metals and gold.
    Exporters added to the Nikkei's weak tone, with Panasonic
Corp dropping 1.8 percent, Toshiba Corp 
shedding 1.9 percent and Fanuc Corp falling 2.2
percent.
    Construction equipment makers also dropped sharply. Komatsu
Ltd shed 4.1 percent, the second-biggest percentage
loss leader on the board, and Hitachi Construction Machinery Co
Ltd dropped 3.4 percent after Caterpillar Inc's 
dealers reported slowing sales for the three-month period ended
in January.
    "It's a correction. Yet small cap stocks maintained a steady
tone today, buoyed by retail investors' rotational buying," said
Mitsushige Akino, chief fund officer at Ichiyoshi Asset
Management. 
     "This correction phase could last until early March, unless
something like the upcoming Abe-Obama summit or BOJ governor
nomination moves the forex market," he said.
    The Nikkei has gained about 30 percent and the yen has
declined some 15 percent against the dollar since mid-November
driven by bold fiscal stimulus and monetary easing policies
pursued by Prime Minister Shinzo Abe's new government to
reignite the economy.
    Yutaka Miura, a senior technical analyst at Mizuho
Securities, said investors were cautiously awaiting the outcome
of a meeting in Washington on Friday at which Abe and U.S.
President Barack Obama are expected to discuss a range of issues
including economic and trade matters.
    For this week, some analysts said the Nikkei is expected to
trade in a fairly tight range.
    "The Nikkei pierced the psychological resistance level of
11,500, but trading volume has stayed low as investors want to
stay on the sidelines before major events," said Yutaka Miura, a
senior technical analyst at Mizuho Securities.
    The market was likely to remain cautious before the
nomination of a new BOJ governor, Miura said.
    The government has delayed nominating a governor by a week,
fanning talk of friction between the prime minister and the
finance minister over who should run the central bank and take
aggressive action to revive the economy.
    The broader Topix dropped 1.1 percent to 962.86 in
thin trade, with 2.72 billion shares changing hands, compared
with last week's average daily volume of 4.03 billion shares.
    The Mothers index and the Jasdaq index of
small to medium-cap stocks and start-up companies gained 2.4
percent and 0.8 percent, respectively.
    
    DREAMLINER BATTERY MAKER BOUNCES
    GS Yuasa Corp, which makes batteries for 787
Dreamliner, jumped 8 percent after a source told Reuters that a
senior Boeing Co executive will meet with the head of the
U.S. Federal Aviation Administration on Friday and present a
series of measures aimed at preventing battery failures that
grounded its Dreamliner jets for five weeks. 
    A Nikkei newspaper report that Japan's biggest pension fund
is considering increasing its exposure to Japanese stocks lent
some support to sentiment and contained the broad market's
losses, analysts said.
    The Government Pension Investment Fund, which oversees more
than 100 trillion yen ($1.1 trillion) in retirement savings,
will consider raising its exposure to domestic stocks in its
first portfolio reallocation in years, the Nikkei said.
    "This report is suggesting that we will see further stock
rises in the future, so the Japanese market probably won't face
a significant sell-off even after it rose sharply" said Fujio
Ando, an analyst at Chibagin Securities.
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