Tokyo's Nikkei dips on Spanish debt concerns

Mon Apr 16, 2012 3:17am EDT

* Exporters stumble on euro zone worries
    * Nippon Steel gains on revised profit report
    * U.S. earnings seen as catalyst for market rebound

    By Sophie Knight	
    TOKYO, April 16 (Reuters) - Japan's Nikkei share average
fell 1.7 percent on Monday as investors cut their exposure to
risky assets in response to fresh concerns over the euro zone
debt crisis after Spanish bond yields soared.	
    Exporters dependent on the European market were heavily
sold, with TDK Corp, Konica Minolta Holdings Inc
 and Nikon Corp shedding between 2.2 and 3.9
percent as the euro slipped below 105 yen. 	
    "Even after the European Central Bank's liquidity operation 
earlier this year, the yields of Spain's government bonds are 
continuing to rise, which reflects investor doubts over its 
finances and this concern came to the fore last week," said 
Fumiyuki Nakanishi, general manager of investment and research 
at SMBC Friend Securities.	
    The Nikkei closed down 167.35 points to 9,470.64, falling
below 9,500, a key psychological level. 	
    Concerns over the viability of Spanish banks and their
possible impact on global banking system hit Japanese bank
shares, with Mitsubishi UFJ Financial Group, Sumitomo
Mitsui Financial Group and Mizuho Financial Group
 shedding between 2.3 and 2.5 percent.	
    Data released on Friday showed Spanish banks increased their
reliance on cheap loans from the European Central Bank, as they
were virtually shut from the wholesale credit market.	
    "It's going to be a mixed market this week, as investors
react to news from the euro zone and the NYSE's poor performance
last week, as well as the financial forecasts from some major
Japanese firms due this week," said Masayuki Otani, chief market
analyst at Securities Japan, Inc. 	
    Nippon Steel Corp gained 0.5 percent after the
Nikkei newspaper said the steelmaker was expected to log higher
pretax profits for the year ended March 31, citing improved
demand in January-March.	
    Sharp Corp also bucked the trend, climbing 1.2
percent after announcing that it had begun producing the world's
first high performance liquid crystal display panels, which
traders said could give it an edge over its South Korean and
Taiwanese competitors.	
    Also outperforming the broader market, convenience store
operator Seven & I Holdings added 0.2 percent.  	
    "Some of the best performers on the domestic market have
been retailers this year, who have really done better than
expected in light of the earthquake last year," said Fujio Ando,
senior managing director of Chibagin Asset Management.	
    The broader Topix index dropped 1.4 percent to
finish at 803.83 yen.	
    Trading was at its thinnest in three months, with 1.52
billion shares changing hands on the main board. 	
    	
    OVERSEAS CONCERNS	
    In addition to a still-vulnerable euro zone, concerns about
unemployment in the United States and slowing demand in China
have weighed on the market recently, with the Nikkei losing 6
percent in April after rallying more than 19 percent in the
first quarter.	
    Strategists say investors are looking to the International
Monetary Fund's world economic update on Tuesday for insight.	
    "We might see the growth forecast for the United States go
up to 2 percent from the 1.8 percent the IMF said in January,
which would boost the market," Ando said.	
    Several major U.S. companies are due to post their results
on Tuesday, including technology group Intel Corp,
American Express Co, General Electric Co, and
McDonald's Corp.  	
    Aside from U.S. results, market participants are pinning
their hopes on a possible easing move by the Bank of Japan at
its meeting on April 27.  	
    Kansai Electric Power Co rose 0.5 percent to 1,299
yen after Japan declared its two idled nuclear reactors were
safe to restart.  	
   The electric & gas sector added 0.3 percent to
make it one of the two sectors in positive territory.
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