Nikkei hits 4-wk low on weak Japan GDP, US fiscal woes

Sun Nov 11, 2012 8:25pm EST

* Nikkei down 0.6 pct
    * Nikkei heads for 6th straight session of loss
    * Suzuki Motor climbs on strong H1, keeps full-year outlook

    By Dominic Lau
    TOKYO, Nov 12 (Reuters) - The Nikkei average slipped to a
four-week low on Monday, heading for a sixth session of decline,
hurt by weak Japanese GDP data and concerns over U.S. fiscal
woes that threaten to push the world's largest economy into
recession.
    Exporters, which will be hurt most if the U.S. slips into
recession on 'fiscal cliff' woes, took a beating. Toyota Motor
Corp, Honda Motor Co, Canon Inc and
Nikon Corp were down between 0.8 and 1.1 percent.
    Sony Corp shed 1.4 percent after Moody's Investors
Service cut the consumer electronics maker's debt rating to
Baa3, just one notch above 'junk' rating, citing shrinking
demand for its products.  
    The Nikkei fell 0.6 percent to 8,703.73, although
upbeat data from the United States and China helped limit
losses. A six day losing run would be longest such streak since
July.
    "It's partly due to the GDP," a trader at a foreign bank
said. "It's also partly the feeling that the yen is getting
stronger again, partly the concern over the 'fiscal cliff'."
    "I think it's just a bit of uncertainty around. There is
nothing to go for in the results (from companies)."
    Japan's economy shrank 0.9 percent in the three months to
September, marking the first contraction in three quarters,
adding to signs that slowing global growth and tensions with
China are nudging the world's third-largest economy into
recession. 
    In the United States, the political bickering over $600
billion of spending cuts and tax increases taking effect in the
new year, known as the 'fiscal cliff', also threatened to tip
the world's largest economy into recession. The concerns have
been weighing on global equities, including Japanese stocks,
particularly as they have also been adding upward pressure to
the yen.
    Adding to the gloom, company earnings have been weak this
quarterly reporting season, with 59 percent of 141 Nikkei
companies that have reported so far undershooting market
expectations, according to Thomson Reuters StarMine. That
compared with 54 percent in the previous quarter.
    But the market gained some support from better-than-expected
U.S. consumer sentiment, which rose to its highest level in more
than five years in November, and Chinese exports growth which
hit their fastest pace in five months.
    The broader Topix index eased 0.6 percent to 726.64.
    Among the gainers were Suzuki Motor Corp, which
surged 5.1 percent after the automaker said nine-month net
profit rose 30.9 percent and kept its full-year outlook, saying
that a decline in sales in China on anti-Japan sentiment would
be offset by gains in Southeast Asia.
    The benchmark Nikkei is still up 3 percent this year,
trailing a 9.7 percent gain in the U.S. S&P 500 and a
10.5 percent rise in the pan-European STOXX Europe 600.
  Credit Suisse said in a report it was keeping Japanese
stocks at 'benchmark' in its global equities model portfolio but
noted that Japan's monetary policy remained the tightest of any
major region. 
    "Both fiscal and monetary policy look abnormally tight.
Earnings momentum is very poor. Only Japan's pro-cyclicality, a
probably LDP-led government next year and (still) very cheap
asset-based valuations stop us from going underweight," it said.
    Japanese equities carry a 12-month forward price-to-book
ratio of 0.83, much cheaper than the S&P 500's 1.9 and STOXX
Europe 600's 1.38, data from Thomson Reuters Datastream showed.