Tokyo stocks snap three-day winning streak, investors sell for quick profits

20:37, April 06, 2010      

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Japan's Nikkei Stock Average fell 0. 5 percent on Tuesday snapping a three-day winning streak as recent gains and a rising yen against the U.S. dollar and the euro encouraged profit taking by investors.

The key benchmark Nikkei lost 56.98 points from Monday's highest close since Oct. 1, 2008 to close at 11,282.32.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange was down 4.89 points, or 0.49 percent, at 990. 79.

Some brokers viewed the market as having severely overheated and the yen's rise leaving investors little choice but to offload shares.

"The market's overheating more than at any time in over a decade," said Kazuhiro Takahashi, a general manager at Daiwa Securities Capital Markets Co.

"There's no news that could push the yen to 95 against the dollar, making it easy for people to sell."

The yen strengthened to as much as 93.89 versus the U.S. dollar after trading at 94.47 at the close of the Tokyo stock market Monday, priming the market for profit taking brokers said. A stronger yen reduces companies' revenue from overseas profits when repatriated.

Other analysts however were more optimistic, suggesting Tuesday' s dip following a string of 18-month closing highs, was simply the market taking a breather and following optimistic macroeconomic data released from the U.S. recently, suggesting the world's largest economy is in a sustained state of recovery, coupled with market expectations that Japanese companies will reevaluate their profit forecast as earnings season swings into gear soon, would be short lived.

"There have been a lot of reports that companies will revise their earnings forecasts upwards, and these sorts of expectations will limit any dips in stocks," said Hideyuki Ishiguro, a strategist at Okasan Securities, who added that the next target for investors would be 11,500.

"We still don't have enough proof of recovery to get the Nikkei back up to where it was before the Lehman shock, around 12,000. That 11,500 level is about as far as it can rise on these kinds of expectations alone," Ishiguro said.

NEC Corp. lost 2.76 percent to 282 yen and Canon Inc. fell 1.1 percent to 4,460 yen, after J.P. Morgan lowered its rating on the stock to "neutral" from "overweight", saying the shares had reached J.P.Morgan's price target of 4,500 yen.

Hitachi Ltd. retreated 2.66 percent to 366 yen and Sony Corp. fell 1.3 percent to 3,560 yen. Panasonic Corp. also ended the day in negative territory dropping 1.9 percent to close at 1,450 yen.

Toyota Motor Corp. fell 1.05 percent to 3,775 yen as the world' s largest automaker faces further pressure following the announcement Monday the U.S. government plans to slap a fine on the Japanese automaker to the tune of 16.38 million U.S. dollars over its mishandling of recalls for vehicles with defective gas pedals.

It was a different story for Nissan Motor Co. Ltd however, who gained 0.36 percent to 828 yen, following news that the firm and French partner Renault SA basically agreed Monday on a capital and business tie-up deal with Germany's Daimler AG and cross- shareholding plans may be announced as early as Wednesday.

Financials faired well with volume leader Mizuho Financial Group Inc. adding 0.55 percent to 183 yen and Sumitomo Mitsui Financial Group Inc. rising 1.13 percent to 3,130 yen. Meanwhile, Mitsubishi UFJ Financial Group Inc. closed flat at 488 yen.

Shipping lines were the biggest drag on the market Tuesday with Mitsui O.S.K. Lines retreating 2.8 percent to 671 yen and Kawasaki Kisen Kaisha Ltd., the nation's No. 3 shipping line by sales, dropping 2.1 percent to 373 yen. Larger rival Nippon Yusen K.K. sank 2.1 percent to close at 376 yen.

Some 2.1 billion shares changed hands on the Tokyo exchange's first section, up from Monday's volume of 1.8 billion shares.

Declining issues outnumbered advancing ones by 1,018 to 533.

Source: Xinhua


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