Tokyo stocks fall on European debt fears (2)

08:29, May 12, 2010      

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"In today's market environment, there's no buying other than short-covering, and once that comes to a halt, the market gets overwhelmed by profit-taking."

Another Tokyo-based strategist added, "With buying on news about the aid package for Greece running its course there remains the question of how effective it is, although it eased concerns about the crisis before us."

"The euro initially rose on the news but the trend of a weak euro against the yen remains intact and investors do not appear willing to continue buying shares.''

Brokers also highlighted macroeconomic data released from China 's statistics bureau showing its consumer price index for April rose 2.8 percent from a year earlier, the fastest pace in 18 months and housing prices leapt 12.8 percent, causing inflation worries in Asia's fastest growing economy and concerns interest rates may be raised to counter inflation.

Analysts suggested that further money tightening in China could be detrimental to the pace of the global economic recovery.

Companies with an exposure to China fell on the news, with Komatsu Ltd., the world's No. 2 maker of construction equipment that counts Asia as its largest market, retreating 3.4 percent to 1,734 yen and Hitachi Construction Machinery Co., that relies on China for 26 percent of its sales, dropping 2.5 percent to 1,887 yen.

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