Nikkei falls 1.22% on profit taking, exporters weigh

19:08, June 22, 2010      

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Tokyo stocks retreated Tuesday with Japan's Nikkei average dropping 1.22 percent as investors sought to lock in profits made following the previous day's one-month closing high and ratings downgrades on two European banks gave investors cause for thought.

The 225-issue Nikkei Stock Average lost 125.12 points, or 1.22 percent, from Monday to 10,112.89, whilst the broader Topix index of all First Section issues on the Tokyo Stock Exchange dropped 7. 93 points, or 0.88 percent, to 894.56.

Analysts suggested Tuesday's dip was predominantly due to a stark U-turn by foreign investors going from buying to selling for quick profits, but the decline will be short lived as the stock market is underpinned by recent gains in broader U.S. and Japanese markets.

"Today's decline will be a brief pause, given that there have been sharp advances in Japanese and U.S. markets," said one strategist in Tokyo.

"Sentiment overall appears to have turned rather positive, now that it appears the euro may have bottomed out, and this can lead the market suddenly and sharply higher, the way we saw yesterday on the yuan news," said Hideyuki Ishiguro, a strategist at Okasan Securities.

The yen's appreciation against the euro also gave investors an excuse to unload export-related issues and capitalize, although some brokers maintained that, profit-taking aside, Japanese share prices are on a recovery trend and news the yuan may become more flexible in currency markets will encourage investors to take longer term positions.

The market's rebound may be hindered by reemerging concerns in the euro zone, following ratings agency Fitch on Monday cutting French bank BNP Paribas' long-term international rating to AA- from AA, citing reliance on capital markets for a large part of its profits and a deterioration of asset quality in 2009.


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(Editor:赵晨雁)

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