TOKYO, Feb 4 Japan's Nikkei share average is set
to drop on Tuesday as renewed fears about the debt crisis in
peripheral euro zone countries prompt investors to lock in easy
profits following five straight days of gains.
Market players said the Nikkei was likely to trade between
11,100 and 11,250 on Tuesday, easing from a 33-month closing
high of 11,260.35 hit on Monday.
Nikkei futures in Chicago closed at 11,140, down
1.2 percent from the close in Osaka of 11,270, while
U.S. indices also backed away from five-year highs as rising
Spanish and Italian bond yields alerted investors to renewed
strife in Europe.
Spain's prime minister faced calls to resign over a
corruption scandal, while a probe of alleged misconduct
involving an Italian bank was expected to widen three weeks
before a national election.
"There will only be a spurt of profit-taking in reaction to
this kind of news because it's just one small piece of a very
long and drawn-out crisis," said Toshiyuki Kanayama, senior
market analyst at Monex.
"But the U.S. fell off highs and the Nikkei is also begging
for a fall after rising for five straight days."
The Nikkei rose 0.6 percent on Monday after the dollar
gained on strong U.S. jobs and manufacturing data. Some 3.54
billion shares changed hands, the highest number since March
2011, when a massive earthquake hit Japan.
Japan is in the midst of a relatively disappointing earnings
season, with about two-thirds of the 88 Nikkei companies that
have reported so far missing analysts' estimates, according to
Thomson Reuters Starmine.
But investors are optimistic that recent weakness in the yen
will boost the bottom line for companies in the future.
The Japanese currency has slid 14 percent since
mid-November, propelling the Nikkei up 30 percent, after Shinzo
Abe, then leader of the opposition party and now prime minister,
called for a more favourable exchange rate and an aggressive
shift in monetary and fiscal policy.
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STOCKS TO WATCH
- HITACHI LTD
Hitachi Ltd cut its full-year profit outlook by about 13
percent on Monday to 420 billion yen ($4.5 billion), citing a
weak economic recovery in Europe and a slowdown in emerging
Japan Airlines Co Ltd raised its operating profit forecast
by 12.7 percent to 186 billion yen ($2 billion) for the year to
March 31. It predicted the impact on its earnings from the
grounding of Boeing's Dreamliner jet at around 700
million yen for the rest of this fiscal year.
Fast Retailing Co Ltd said on Monday that same-store sales
at its Uniqlo clothing chain in Japan fell 5.5 percent in
January from a year earlier, citing fewer number of Saturdays
and Sundays in the month than last year.
-TOKYO ELECTRIC POWER
Tokyo Electric Power Co Inc widened its operating loss
forecast to 275 billion yen ($3 billion), from previous guidance
of 225 billion yen, as a weaker yen pushes up fuel costs.
Fujitsu is likely to post a net loss of around 100 billion
yen ($1.1 billion) for the year ending March 31, a reversal from
a previous forecast of a 25 billion yen profit, as the cost of
restructuring its struggling semiconductor business ramps up,
the Nikkei business daily said on Tuesday.