Nikkei slips toward worst weekly losing run in 20 years

Thu May 31, 2012 11:15pm EDT

* Nikkei falls 0.7 pct on weak U.S., China data
    * Topix set for longest weekly losing streak since 1975
    * Exporters sink; yen hits 11-1/2 yr high against euro

    By Sophie Knight	
    TOKYO, June 1 (Reuters) - Japan's Nikkei average slipped on
Friday morning, heading for a ninth straight week of losses to
match its longest such run in 20 years, after disappointing
Chinese and U.S. data compounded fears about the deepening euro
zone debt crisis.	
    Concern about slowing growth in the world's two biggest
economies and the possibility of the euro zone's collapse kept
the yen firm against the dollar and sent it rocketing to an
11-1/2 year high against the euro, weighing on exporters who
already face weakening demand for their products. 	
    Canon Inc, Mazda Motor Corp, Nissan Motor
Co and Sony Corp lost between 2 and 4 percent.	
    The Nikkei slipped 0.7 percent to 8,479.12.	
    "The problem is that although Japanese stocks are
technically cheap according to past barometers, the market has
always moved more on foreign factors than domestic ones," said
Yutaka Miura, senior technical analyst at Mizuho Securities. "So
the falls today are a reaction to poor U.S. data last night."	
    U.S. jobless claims rose for the seventh week in eight,
putting investors on edge before Friday's monthly nonfarm
payrolls report, while factory activity in the U.S. Midwest
slowed considerably this month and economic growth in the first
quarter was softer than anticipated.	
    Economists in a Reuters poll estimated that 150,000 jobs
were created in May, compared with 115,000 in April, with the
unemployment rate expected to remain at 8.1 percent.	
    China announced on Friday its official purchasing managers'
index (PMI) fell to 50.4 in May, the weakest this year and down
from April's 13-month high, indicating that output is continuing
to cool in the world's second-largest economy. 	
    Investors sought refuge in defensives, with telecoms firms
benefiting. KDDI Corp gained 2.4 percent and Softbank
Corp added 1.6 percent.	
    NTT DoCoMo put on 3.5 percent, also boosted by an
extended report in the Nikkei business daily on Thursday about
its tie-up with Amazon Japan to sell prepaid internet access for
smartphones and tablet computers, first reported on Monday.	
    The Nikkei shed 1.1 percent on Thursday to log its worst
monthly fall in two years. It was deep in "oversold" territory,
with its 14-day relative strength index at 28.2.	
    The index is down 1.2 percent this week, and has fallen 17.3
percent since hitting a one-year high on March 27 on concerns
about Europe and a slowdown in growth in the United States and
China.	
    "Many investors are watching the timing to enter the market.
However, as long as the knife is falling, nobody can catch it,"
said Ryota Sakagami, chief strategist in equity research at SMBC
Nikko Securities.	
    "The current problem is the tail risk from Europe ...
However, (it's) different from last year," he said, adding that
the U.S. economy was in better shape, but that investors had
high expectations for its performance. 	
    The broader Topix lost 1 percent to 712.68. The
index is down 1.3 percent this week, on track for a ninth
straight week of losses to mark its worst weekly losing streak
since 1975.	
    The sell-off has taken the Topix's 12-month forward
price-to-earnings ratio to 10.9, a level not seen since November
2008, data from Thomson Reuters Datastream showed.