Nikkei set for sharp drop below key support

Tue Jun 29, 2010 7:38pm EDT

 TOKYO, June 30 (Reuters) - Japan's Nikkei average is set for
a sharp drop on Wednesday, after a tumble on Wall Street, with
the benchmark index seen breaking below a key support level,
which market players say will ignite more falls.
 Nikkei futures traded in Chicago 2NKc1 closed at 9,375,
down 1.8 percent from the Osaka close JNIc1.
 Charts have turned bleaker, with the Nikkei's MACD set for a
bearish cross and its slow stochastic, which gives near-term
signals on market trends, edging down in oversold territory.
 The Nikkei ended the previous day at 9,570.67, and its next
targets stand just below 9,400, a six-month low hit this month,
and then 9,250 and 9,000, one market analyst said.
 For the quarter ending Wednesday, the Nikkei is poised for
its worst quarter since Lehman Brothers failed in 2008.
 "Europe's finance and debt problems have come to the fore,
and there's a growing concern that Europe's confusion might
actually negatively impact the global economy going forward,"
said Kenichi Hirano, operating officer at Tachibana Securities.
 "But I don't expect to see a panic in the market, because if
not as if investors had been overly optimistic and there was a
landslide all of the sudden. They had been already vigilant."
 The benchmark Nikkei .N225 is likely to move between 9,300
and 9,500, market players said. It slipped 1.3 percent on Tuesday
to its lowest close in two weeks.
 On Tuesday, the S&P 500 tumbled to its lowest level in eight
months in a sell-off triggered by a wave of increasing alarm over
the global economic outlook, including escalating doubts about
the stability of Europe's banks. [.N]
 The benchmark Nikkei is on course to to book its worst
quarter since October-December 2008 as European debt worries
pushed investors to curb their willingness to bet on risky
assets, including equities.
 For the quarter ending Wednesday, the index has shed nearly
14 percent so far, compared with a 21 percent drop in the quarter
that finished in December 2008, following the collapse of Lehman
Brothers.
----------------------MARKET SNAPSHOT @ 2316 GMT ------------
                 INSTRUMENT   LAST       PCT CHG   NET CHG
S&P 500             .SPX       1041.24      -3.1%   -33.330
USD/JPY             JPY=       88.65        0.18%     0.160
10-YR US TSY YLD    US10YT=RR  2.9527          --     0.000
SPOT GOLD           XAU=       1241.1       0.25%     3.100
US CRUDE            CLc1       75.49       -0.59%    -0.450
DOW JONES           .DJI       9870.30     -2.65%   -268.22
-------------------------------------------------------------
> Wall St sinks as economic alarm escalates            [.N]
> Euro slides; dollar, yen rally on recovery fears   [USD/]
> Strong bid for U.S. debt as stocks tumble           [US/]
> Gold rebounds as equities, commodities sell off    [GOL/]
> U.S. crude pares losses after big API stock draw    [O/R]
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 (Reporting by Aiko Hayashi; Editing by Edwina Gibbs)