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Nikkei tumbles to 2-wk lows as central banks signal cheap money era may end
June 30, 2017 / 6:54 AM / 2 months ago

Nikkei tumbles to 2-wk lows as central banks signal cheap money era may end

* Nikkei down 0.9 pct but up on month and on quarter

* Recent gainers succumb to profit-taking

* Tech shares follow their U.S. peers

By Ayai Tomisawa

TOKYO, June 30 (Reuters) - Japan's Nikkei share average stumbled to two-week lows on Friday on worries cheap funding from European central banks may be soon coming to an end.

While 30 of the Topix's 33 subsectors were in negative territory, tech names in particular underperformed after a sharp sell-off in the Nasdaq overnight soured sentiment.

The Nikkei dropped 0.9 percent to finish at 20,033.43, after earlier falling to as low as 19,946.51 - the weakest level since June 16 and just above a key technical support from Ichimoku Kijun line at 19,944.

On the month, it rose 1.9 percent, the third straight month of gains. For the quarter, it has gained 5.9 percent.

In Friday's trading recent gainers bore the brunt of selling, with Nintendo slipping 2.8 percent and Sony 1.8 percent.

Some other tech shares were sold, with Advantest Corp tumbling 2.1 percent and Panasonic Corp shedding 1.7 percent.

The Nikkei volatility index jumped to 15.75, hitting its highest level since late May.

Equity investors are concerned about the rise in interest rates globally, as a drumbeat of hawkish comments from the European Central Bank, the Bank of England and the Bank of Canada prompted investors to review their scenarios.

"Stock markets around the world have been supported by ultra-loose monetary policy by their central banks, so the signs of reversing are frightening investors," said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management.

"With these central banks hinting at tightening, the next question will likely be to the Bank of Japan asking whether and when it will start discussing exit strategy."

On Friday, data showed that Japan's core consumer prices rose 0.4 percent in May from a year earlier, marking the fifth straight month of gains and offering the central bank some hope a strengthening economy will gradually lift inflation toward its ambitious 2 percent target.

The broader Topix dropped 0.8 percent to 1,611.90.

Dollar-based MSCI Japan rose 1.2 percent on the month and 5.3 percent on the quarter, outperfoming the MSCI ACWI of the world's 46 markets.

On the other hand, the index of Japanese real estate investment trusts (REITs) fell to a 16-month low, partly on worries about rise in global interest rates. (Additional reporting by Hideyuki Sano; Editing by Eric Meijer & Shri Navaratnam)

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