Nikkei falls 1.4 pct, machinery orders adds worries about growth

* Machinery orders increase worries about a global slowdown
* Komatsu, Sumitomo Heavy fall on machinery data
* Nikkei stands just above Ichimoku tenkan line
* Tokyo Electron down on weak demand, JPM downgrade

By Hideyuki Sano
TOKYO, July 9 (Reuters) - Japan's Nikkei share average
suffered its biggest fall in over a month on Monday as
surprisingly weak Japanese machinery orders fanned worries about
faltering global growth sparked by sluggish U.S. jobs figures.
While some market players see the Nikkei's retreat is a
healthy correction after five straight weeks of gains, others
fear that further signs of a global slowdown could reverse the
market's rally since early June.
Although Japanese machinery orders data can be highly
volatile, a 14.8 percent fall in orders in May from the previous
month -- the largest drop since comparable numbers became
available in April 2005 -- shocked some market players.
The machinery data "raised anxiety" about the impact that
Europe's debt crisis can have on Japan's economy, said Kenichi
Hirano, market analyst at Tachibana Securities.
He said that while Japanese companies are expecting average
profit growth of 10 to 15 percent this financial year, "that may
have to change."
The Nikkei fell 1.4 percent to 8,896.88, posting its
daily biggest fall since June 8 and slipping for the third
straight session. The broader Topix index dropped 1.0
percent to 763.93.
"I think it is natural to have some adjustment after five
straight weeks of gains. The BOJ tankan showed strong capital
spending plans so one weak machinery order number alone
shouldn't be a source of concern," said Soichiro Monji, chief
strategist at Daiwa SB Investments.
On the daily Ichimoku chart, the Nikkei stood just above an
important support from the tenkan line at 8,888. Another key
support is its 25-day moving average, which stood around 8,750
but looks set to rise near 8,800 in coming days.
The Nikkei was also hit by the U.S. jobs data released on
Friday, which showed a third month of a tepid job growth but
was not weak enough to significantly boost expectations of more
stimulus from the U.S. Federal Reserve.
In addition, China's annual consumer inflation fell to 2.2
percent in June from 3 percent in May, adding to fears about
slowing growth, with Shanghai shares falling to fresh
six-month lows.
A combination of weak domestic machinery orders and worries
about China made machine makers a prime target for selling, with
the Tokyo Stock Exchange's machine maker subindex falling 2.2
percent.
Komatsu fell 4.0 percent as Nomura Securities
downgraded the stock to "neutral" from "buy" and cut its target
price. Competitor Sumitomo Heavy Industries shed 3.3
percent.
Tokyo Electron fell 6.5 percent after the
manufacturer of chipmaking machines said on Friday its orders in
April-June fell 28 percent from a year earlier, prompting
JPMorgan to downgrade the company to "neutral" from
"overweight".
On the other hand, defensive stocks gained, with
pharmaceuticals up 1.1 percent and utilities
rising 0.6 percent.
On the main board, 535 shares made gains while 1,016 shares
declined. Trade volume was thin, with only 1.28 billion
shares traded, the smallest number since Jan. 5.
The market is unlikely to draw support from a Bank of Japan
two-day policy meeting that concludes on Thursday. After
recently updating its economic assessment, the BOJ is not
expected to take easing steps.
"A move has not been priced into the market because it would
seem contradictory of them to ease after a pretty rosy economic
review last week and a surprisingly positive tankan survey
before that," said Hiroyuki Fukunaga, CEO of Investrust.
On July 5, the BOJ upgraded its assessment for all nine
regions of the economy for the first time in nearly three years
as strong private consumption and post-tsunami reconstruction
supported growth. A tankan survey on July 2 showed companies
were more upbeat about business conditions.