Nikkei hits 5-month low, investors hold breath ahead of US jobs

Fri Aug 5, 2011 2:40am EDT

 * Fading impact from intervention, monetary easing -fund
manager
 * Commodity stocks fall sharply
 * Nikkei dips below key 9,300 mark before finding support
 * Topix below 800 for first time since March 17
 * Investors on alert ahead of U.S. jobs data
 By Ayai Tomisawa and Antoni Slodkowski	
 TOKYO, Aug 5 (Reuters) - Japanese stocks on Friday tumbled
to their lowest since the post-quake rout in March as investors
ran for exits after the worsening financial crisis in Europe
compounded anxiety over a weak U.S. economy that has come close
to stalling.	
 Retail investors and foreigners were spotted offloading
aggressively, but institutional players were not completely
liquidating their positions, instead continuing to slash riskier
bets and protect their portfolios. 	
 While 32 of 33 subsectors on the Topix were lower,
fund managers shifted into retailers and other domestic demand
related shares, selling commodity stocks including oil refiners
and trading houses, which were pumelled as U.S. crude prices
dropped sharply.	
 "This is not only about some bad data from the U.S. economy
-- look how Italian and Spanish CDS spreads have widened
overnight -- that's what's really pushing the market down," said
Takashi Aoki, a senior fund manager at Mizuho Asset Management.	
 Aoki added that Friday's sell-off was exacerbated by some
contract-termination related to selling by hedge funds.	
 The benchmark Nikkei average fell 3.7 percent to
9,305.04, while the broader Topix dropped 3.3 percent to 809.32.	
 The Nikkei hovered around its support at 9,300, where the
index stood for some time after a slide that followed the March
11 earthquake and tsunami. Soon after the open it hit an
intraday low of 9,264.09.	
 For the week, the index shed 5.4 percent.	
 Analysts at brokerage CLSA said that below chart support at
9,300, major support is seen in the 8,800-8,900 area. A sharp
fall through this level would open the door for a test of the
next support level at 7,800, analysts said.	
 The broader Topix fell below the 800 mark for the first time
since March 17, at one point dropping as far as 794.16.	
 The Dow and the S&P tumbled more than 4 percent on Thursday
and the Nasdaq lost 5 percent on fears that the United States is
facing another recession and that Europe's sovereign debt crisis
is swallowing two of its largest economies.	
 The market's recent malaise stems from a number of factors.
U.S. economic data has worsened, suggesting slowing growth from
an already sluggish pace in the first half, while Europe's
sovereign debt crisis has defied remedies and threatens to
engulf the large euro-zone economies of Spain and Italy.	
 	
 IMPACT FADING	
 Fiscal and economic woes in Europe and the United States
pushed the yen up near record highs on Thursday as investors
sought the currency as a safe haven, prompting Japan to
intervene in the forex markets and ease monetary policy to
relieve pressure on the export-reliant economy. 	
 But these efforts were negated by renewed concerns over the
global economy after the U.S. market tumbled, reflecting bearish
sentiment among investors.	
 "It makes sense to hold Japan stocks as long as
U.S. markets are strong. But as the market cautiously awaits the
outcome of U.S. jobs data on Friday, people are unloading risky
assets," said Fumihito Akiyama, a fund manager at Sparx Asset
Management.	
 "The Japanese government intended to support the stock
market by intervening in the foreign exchange market, but the
effects of this are fading."	
 Japanese Finance Minister Yoshihiko Noda on Friday repeated
that he was closely watching yen moves, signalling Tokyo's
readiness to continue with its yen-selling intervention that
media said reached a record 4 trillion yen ($50.6 billion).	
 Oil shares nosedived, with Inpex falling
6.8 percent to 533,000 yen and Japan Petroleum Exploration
 tumbling 5.4 percent to 3,565 yen after oil dropped as
much as 6 percent on Thursday, hit by worries of an economic
slowdown. 	
 Mitsubishi Corp , Japan's biggest commodity trader,
fell 2.9 percent to 1,932 yen. Itochu Corp was down 3.6
percent at 854 yen, while the industry's No.5 player Marubeni
 dropped 5.4 percent to 529 yen.	
 Trading volume was brisk amid the worst sell-off since the
March quake, reaching 2.5 billion shares on the main board, the
highest since May 13.	
 Last week's average daily volume was 1.7 billion shares.	
 Underscoring the bearish sentiment, as many as 1,576 shares
declined, while only 69 shares, or just 4 percent of those
listed on the first section, advanced.	
	
 (Editing by Joseph Radford)