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Nikkei set to drop as euro zone fear rears again
September 26, 2012 / 11:52 PM / in 5 years

Nikkei set to drop as euro zone fear rears again

TOKYO, Sept 27 (Reuters) - Japan's Nikkei share average was
set to extend losses on Thursday after anti-austerity protests
in Spain threatened a smooth resolution to the euro zone debt
crisis, pushing the country's borrowing costs back to levels
seen as unsustainable.
    Market players said the Nikkei was likely to trade between
8,800 to 8,950 on Thursday after Nikkei futures in Chicago closed at 8,865, down 0.6 percent from the close in
Osaka. The Nikkei closed at 8,906.7 on Wednesday.
    Violent protests in Madrid against expected austerity
measures and talk of Catalonia's secession increased the
pressure on Spanish Prime Minister Mariano Rajoy as he moves
closer to requesting rescue funds. 
    "There are growing concerns that the euro zone debt crisis
is worsening again," said Masayuki Doshida, senior market
analyst at Rakuten Securities.
    "The ECB's plan to buy bonds was an excellent one but it
will be completely meaningless if they don't carry it out. Even
worse would be if they started to buy Spanish debt and stopped
if the conditions aren't fulfilled, which would cause havoc."
    In Greece, anti-austerity protests erupted as international
lenders admitted to difficulty in working out how to solve
Athens' debt crisis.  
    The Nikkei dropped 2 percent on Wednesday as the bulk of
companies on the Topix index went ex-dividend, with the index
smashing through the psychologically important 9,000 support
level as it recorded its biggest daily fall since June.
    Japanese firms with exposure to China are likely to come
under pressure on Thursday after the Shanghai Composite Index
 plumbed 3-year lows on Wednesday.
    Exporters such as automakers are also threatened by rising
anti-Japan sentiment over a territorial dispute that has forced
firms to temporarily close stores and factories.
.
    The S&P 500 marked its fifth straight loss on
Wednesday, albeit after hitting a five-year high struck on Sept.
14, as investors shielded themselves from riskier assets with
exposure to the euro zone and bought up defensive shares. 
    The Nikkei is currently trailing gains in U.S. and European
indexes, being up 5.3 percent on the year as of Sept. 26,
compared to a 14.6 percent rise in the S&P 500 and a 12.8
percent gain in the STOXX Europe 600 index 
    The Nikkei is expected to gain 12 percent this year,
according to a Reuters poll of 22 analysts and fund managers
conducted over the past week, reaching 9,500 by the end of
December. 

> S&P 500 falls a 5th day as euro-zone tensions escalate  
> Euro declines on Spain woes as its bond yield tops 6 pct 
> Prices rise as euro zone fears resurface                
> Gold down but off two-week low, EU debt crisis eyed     
> Oil falls as Europe's crisis reinforces growth worries  
    STOCKS TO WATCH
    - TOYOTA MOTOR CO 
    Toyota is aiming to boost sales in Europe by 10,000 or more
vehicles in 2012 from 822,000 a year ago, expanding market share
to 4.5 percent and aiming to boost that to 5.5 percent over the
next five years. 
    - SUMITOMO RUBBER INDUSTRIES LTD 
    Sumitomo Rubber said it will build seven plants in Turkey,
Russia and Africa, bringing its total number of factories to 18,
in an aim to have 37 percent of its tire sales from developing
nations by 2020.
    - DAIEI INC 
    Daiei, a supermarket chain operator, cut its operating
profit forecast for the year ending Feb. 2013 by 3 percent to
843 billion yen ($10.8 billion) and said it now expected a net
loss of 25.14 billion yen, down from a previous forecast of a
5.03 billion yen profit. 
     - SHARP CORP 
    Sharp may pull its solar panel business out of Europe and
the United States as the cash-strapped company looks for ways to
withdraw from money-losing businesses and cut costs, two sources
told Reuters.

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