Nikkei set to fall as sentiment sours on U.S. budget concerns
TOKYO, Dec 5 (Reuters) - Japan's Nikkei share average is set to extend the previous session's losses on Wednesday as investor sentiment soured after Wall Street eased on concerns over the U.S. budget tangle. U.S. legislators continue to negotiate a deal to avoid a $600 billion package of tax hikes and federal spending cuts that would begin Jan. 1 and could push the economy into recession. Optimism of progress was dented by remarks from President Barack Obama, who rejected a Republican proposal to resolve the crisis as "out of balance" and said any deal must include higher tax rates for the wealthiest Americans. Analysts said the Nikkei was likely to trade between 9,350 and 9,450 on Wednesday, while Nikkei futures in Chicago closed at 9,405, down 25 points from the Osaka close of 9,430. On Tuesday, the index ended 0.3 percent lower at 9,432.46 points. "A risk of profit-taking is rising as the dollar is breaching a support level of 82 yen," said Yutaka Miura, a senior technical analyst at Mizuho Securities. But he added that ongoing hopes for more monetary easing in Japan should help limit losses in the market. The currency was trading at 81.90 yen to the dollar on Wednesday, down from its 7-1/2-month low of 82.84 touched on Nov. 22. A fall below the 82 yen threshold could trigger selling in the equities market as a stronger yen cuts the value of exporters' overseas incomes when repatriated. During the past three weeks, the Nikkei benchmark has rallied 8.9 percent, led by exporters, and the yen has fallen on speculation the Bank of Japan will be pushed to adopt aggressive policy action after the Dec. 16 election. The leader of the main opposition Liberal Democratic Party, Shinzo Abe, has been calling for the Bank of Japan to take bolder action, including setting a 2 percent inflation target and embarking on "unlimited easing". The LDP is expected to win the most seats and form the government after the election. The broader Topix index was flat at 781.97 on Tuesday. > Wall St dips as investors seek cliff progress [ .N] > Euro rises to near 7-week high vs dollar on Greece hopes > Bond prices rise on Fed buying but range holds > Gold hits one-month low on fund selling, technicals > Oil falls on U.S. budget, fuel demand concerns STOCKS TO WATCH --Sharp Corp Qualcomm Inc will invest as much as $120 million in Sharp, a cash injection likely to make it the struggling Japanese TV maker's biggest shareholder, and boost Sharp's efforts to remain viable. --Fast Retailing Co Fast Retailing said on Tuesday that same-store sales at its Uniqlo chain of clothing shops in Japan jumped 13.7 percent in November from a year earlier due to strong sales of its down jackets and winter underwear. --Sony Corp Sony aims to raise its capital ratio to at least 40 percent in the year ending March 2015, the Nikkei reported, citing an interview with Chief Financial Officer Masaru Kato. The struggling electronics giant intends to meet that goal, which excludes financial operations, by amassing profits through a recovery in its business performance, the Nikkei said. The firm also hopes that 150 billion yen in convertible bonds it issued last month will help lift its capital ratio from 27.1 percent as of the end of September as the bonds are turned into stock, the Nikkei said. --Universal Entertainment Corp Universal Entertainment on Tuesday sued Thomson Reuters and three of its journalists for defamation over news articles relating to millions of dollars in payments Universal made to an ex-consultant to the Philippine gaming authority. --Sumitomo Chemical Co Sumitomo Chemical may reconfigure or upgrade its sole 415,000 tonnes-per-year naphtha cracker in 2015 so that it remains profitable in the face of shrinking domestic demand, industry sources said.
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