Nikkei hits 1-week low, exporters weighed by firmer yen

* Renesas untraded on glut of buy orders, govt mulls rescue
* Defensives in demand, global growth still a concern

By Dominic Lau
TOKYO, Sept 24 (Reuters) - The Nikkei share average fell to
a one-week low on Monday, as a firmer yen added to woes for
automakers and other exporters, which have been under pressure
from the territorial dispute between Japan and China.
Concerns about global growth weighed on the market even
though major central banks have launched stimulus measures to
bolster their economies. Some analysts now worry that the new
round of stimulus from the Federal Reserve may suggest that the
U.S. economy is in worse shape than many had feared.
Struggling chipmaker Renesas Electronics Corp was
untraded with a glut of buy orders after two sources said a
Japanese government fund was part of a consortium including
Toyota Motor Corp considering a bailout of the company,
countering a bid by private equity firm KKR.
Renesas was notionally quoted at 336 yen, up 31 percent from
Friday's close of 256 yen.
The Nikkei dropped 0.7 percent to 9,050.35,
supported by the 200-day moving average at 9,016.77, while the
Nikkei China 50, made of Japanese companies with
significant exposure to world's second largest economy, shed 1.3
percent by the midday break
"People are rather cautious," a trader at a foreign bank
said. "There is a lot of media coverage on the China-Japan
dispute. That's also playing into it."
"In 2005 (when the last major dispute erupted), the sell-off
actually came in the second week, not the first week. People are
just worried about history repeating itself and this thing seems
a little bit more serious," he said.
Among exporters, Canon Inc shed 4.1 percent, while
automakers Toyota Motor Corp, Nissan Motor Co
and Honda Motor Co lost between 1.6 and 2.3 percent.
The yen was trading at 78.085 yen to the dollar on
Monday, up from Friday's low of 78.379.
Adding to the gloom, Bank of America Merrill Lynch said
Japanese carmakers saw a 90 percent drop in showroom traffic and
a 60 percent fall sales in the southern Chinese Guangdong
province, the largest market for Japanese brands.
"Dealers believe the current negative sentiment on
Japanese-branded cars could be longer than the previous island
dispute, as Japanese-branded cars' promotional campaigns and TV
commercials have been temporarily suspended," the brokerage said
in a note.
"Some customers are being instructed not to buy Japanese
cars to avoid some difficulties - for e.g., some gasoline stands
are refusing to supply fuel to Japanese-branded vehicles."
Construction machinery makers Komatsu Ltd and
Hitachi Construction Machinery Co Ltd fell 2 and 1.6
percent, respectively after U.S. rival Caterpillar Inc's
reported a 13 percent sales increase for the June-through-August
period, slightly down from the 14 percent increase for the
May-through-July period.

DEFENSIVES SWITCHING
However, investors switched into defensive stocks, which
have a relatively lower correlation to the health of the global
economy, supporting the broader market. The telecommunications
sector rose 1 percent and drugmakers
gained 0.4 percent.
"Nine thousand is a reasonably important technical level.
Our flow today is defensive ... beta (cyclical stocks which tend
to have high volatility) adjust is pretty heavy to the
sellside," another trader said.
The broader Topix index dipped 0.5 percent to 752.54
in light volume, with 41 percent of its full daily average for
the past 90 days.
The Nikkei is up 7 percent so far this year, underperforming
a 16.1 percent rise in the U.S. S&P 500 and a 12.8
percent gain in the pan-European STOXX Europe 600
index.
Japanese equities now have a similar valuation to European
shares, with a 12-month forward price-to-earnings ratio of 11.1,
versus STOXX Europe 600's 11 and S&P 500's 12.9, according to
Thomson Reuters Datastream.