Nikkei falls 1.96% on U.S. economic fears, resurgent yen (2)

12:02, August 21, 2010      

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Pedestrians walk past an electronic share price board in Tokyo, capital of Japan, on Aug. 20, 2010. (Xinhua/Ji Chunpeng)

Market players said the afternoon session saw a gain in momentum as investors began to speculate the outcome of the highly anticipated meeting next week between Prime Minister Naoto Kan and Bank of Japan Governor Masaaki Shirakawa would be positive.

Speculation is rife that Japan's central bank will take measures towards further easing monetary policy as the yen again rose to a fresh 15-year high against the U.S. dollar.

However, skeptics in financial circles pointed out the fact that if the BOJ decides not to intervene in currency moves of procrastinate, the effect on the market would be detrimental.

"If no positive news comes out of that, the yen will probably strengthen further and that will weigh on the Nikkei," said Koichi Nosaka, a market analyst at Securities Japan, Inc.

"Although the chances of currency intervention by Japan may be low, the market at least wants to see the country's strong resolve to protect its interests regarding its currency."

The yen hit 85.19 against the U.S. dollar on Friday in Tokyo from 85.75 on Thursday and against the euro it appreciated to 109. 02 from 109.87, pummeling Japan's export-related issues who see their profits eroded when repatriated.

Canon Inc. fell 2.2 percent to 3,600 yen and Kyocera Corp. lost 3.1 percent to 7,540 yen.

Sharp Corp. retreated 2.7 percent to 853 yen after the Nikkei business daily said the firm would reduce LCD panel production for up to two months starting this month, adjusting supplies as TV inventories pile up in the United States and China.

Chip issues declined following Credit Suisse Group AG's slashing of share price estimates, with Advantest Corp. dropping 3. 2 percent to 1,722 yen and Dainippon Screen Manufacturing Co., which makes chip-production equipment, falling 2.3 percent to 419 yen.

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