Slowdown worries topple Nikkei from 4-mth high, outweigh BOJ action
* Effect of BOJ easing seen as short-lived * Worries about China slowdown persist * JAL extends gains after public re-listing * NTT climbs on share buyback * Chinese output hits 10-month low By Sophie Knight TOKYO, Sept 20 (Reuters) - Japan's Nikkei share average dropped on Thursday morning, pulling back from Wednesday's four-month closing high hit after the Bank of Japan eased monetary policy, and ahead of Chinese manufacturing data. Riskier assets boosted by the BOJ's decision on Wednesday fell as concerns about a persistently strong yen and flagging global growth returned to the fore and investors sought safety in defensives such as communications and pharmaceutical stocks. Output in China contracted for an 11th month in September, although activity recovered from August's low according to the HSBC Flash China manufacturing purchasing managers' index (PMI), released during the midday break. The BOJ said on Wednesday it would expand its asset buying and loan programme by 10 trillion yen ($127.21 billion) to 80 trillion yen to bolster Japan's export-driven economy as it struggles with flagging global demand. The Nikkei dropped 0.7 percent to 9,167.77 by Thursday's midday break after hitting a four-month closing high of 9,232.21 on Wednesday after the BOJ's announcement. "What the BOJ did was a surprise but the yen hardly budged, so today the market is pulling back," said Masashi Oda, chief investment officer at Sumitomo Mitsui Trust Bank. "Perhaps we can hope for something stronger in October." The last time the BOJ unexpectedly eased monetary policy on Feb. 14, the yen softened from around 76 yen to the dollar to 84 yen within six weeks, helping the Nikkei to hit a one-year high of 10,255.15 on March 27. The yen is now around 78.29. "I don't think there's going to be as big an effect on stocks this time as their "Valentine easing"," said Yoshihiko Tabei, chief analyst at Kazaka Securities. "The outlook for the global economy is bleaker. They also didn't mention deflation." The mining sector, seen as particularly sensitive to economic trends, lost 2.3 percent, while retailers, , which are largely shielded from the downside of a strong yen, gained 0.7 percent. But concerns about the impact of China's slowdown on Japan persisted as data showed Japanese exports to the country dropped 9.9 percent in August compared with the same month a year earlier. ID:nT9E8IO001] Investors fear exports will sink even lower in September after several Japanese firms closed factories and stores in the country this week due to protests sparked by a territorial dispute. Nissan Motor Co Ltd, which closed four factories earlier this week, dropped 2.5 percent, a steeper loss than rival Honda Motor Co 's 0.9 percent. A senior trader at a foreign bank said profits from China account for 25 percent of profit at Nissan, ahead of Honda's 16 percent, while Japan's auto lobby head said the impact of the anti-Japan demonstrations will be felt in car sales. SAMSUNG HURTS SEMICONDUCTORS Semiconductor-related companies came under pressure from speculation that South Korea's Samsung Electronics Co Ltd may cut its chip investment next year, although Samsung said it has not decided on its business plan for the next year. Tokyo Electron Ltd, Dainippon Screen Manufacturing Co Ltd and Advantest Corp lost between 4 and 4.4 percent. Nippon Telegraph and Telephone Corp (NTT) climbed 6.4 percent after the company said it plans to buy back up to 150 billion yen ($1.9 billion) worth of its own shares, or 3.4 percent of all shares issued, excluding treasury stocks. Japan Airlines Co Ltd extended gains after Wednesday's public re-listing, rising 0.7 percent as the price for crude slumped to a one-month low of $91.25 on the back of Saudi efforts to tame prices and a massive rise in U.S. crude inventories. Japan Airlines was the most-traded stock on the main board by turnover, while rival All Nippon Airways Co Ltd slipped 1.1 percent after Nomura Securities cut its price target on the carrier to 190 yen from 260 after its new share issue in July. The broader Topix index was down 0.6 percent at 760.63 by the midday break in moderate trade, with volume at 48.6 percent of its full day average over the past 90 days.