Nikkei edges up as buying in defensive stocks offsets U.S. budget worries

Tue Dec 4, 2012 10:45pm EST

* Nikkei up 0.1 pct, Topix down 0.1 pct
    * Investors turn to individual buying factors - analyst
    * Specialty steelmakers up on Credit Suisse's bullish stance
    * Exporters weak on concern about U.S. fiscal tangle
    * Fast Retailing up 1.5 pct on strong November sales

    By Ayai Tomisawa
    TOKYO, Dec 5 (Reuters) - Japan's Nikkei share average edged
up on Wednesday as investors moved into defensive stocks such as
retailers and steelmakers, which offset losses at exporters
stemming from worries over the U.S. budget tangle. 
    At the midday break, the Nikkei was up 0.1 percent to
9,443.65 after weakening earlier. The broader Topix 
shed 0.1 percent to 781.17.
    Analysts said investors sold shares of exporters on worries
about the U.S. economy. 
    Instead, investors found a safe haven in such stocks as Fast
Retailing Co, which posted strong monthly sales in its
clothing chain, and specialty steelmakers after a bullish
brokerage report on the sector.
    "Investors are looking into individual news and rating
changes for reasons to buy today rather than basing their
investment decision on a macro factor," said Hikaru Sato, a
senior technical analyst at Daiwa Securities. "When they cannot
find a currency factor to trade on bellwether exporters, they
pay attention to defensive stocks."
    The dollar last traded at 82.27 yen after falling below 82
yen earlier. A pullback in the dollar below the 82 yen threshold
could trigger selling in the Japanese equities market as a
stronger yen cuts the value of exporters' overseas income when
repatriated.
    Exporters weakened, with Honda Motor Co dropping
1.0 percent, Toyota Motor Corp falling 0.4 percent and
Canon Inc off 0.7 percent.
    Investors continued to worry about the U.S. fiscal cliff,
which could drag down the dollar.
    U.S. legislators continue to negotiate to avoid a $600
billion package of tax hikes and federal spending cuts that
would begin on Jan. 1 and could push the economy into recession.
    Optimism on progress was dented by remarks from President
Barack Obama, who rejected a Republican proposal on the crisis
as "out of balance" and said any deal must include higher tax
rates for the wealthiest Americans.
      
    Market observers said that the Nikkei is expected to stay in
a narrow range for the rest of Wednesday trade. Since the Nikkei
recent had a rapid rise and briefly broke above the
psychologically important 9,500 mark on Monday, investors have
been cautious.
    "What's going to happen with the U.S. fiscal cliff problems?
Where is the U.S. economy heading and are there more
developments on the Japanese political front? Such questions are
on investors' minds while they carefully look for trading cues,"
said Hiroichi Nishi, general manager at SMBC Nikko Securities.
    "Without positive leads on those issues, they probably won't
chase the market higher."
    Over the past three weeks, the Nikkei benchmark rallied
about 9 percent, led by exporters, and the yen has fallen on
speculation that the Bank of Japan will be pushed to adopt
aggressive policy action after Japan's Dec. 16 election. 
    The leader of the main opposition Liberal Democratic Party,
Shinzo Abe, has been calling for the BOJ 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 in
the election and form the government.
    Fast Retailing climbed 1.5 percent to 18,970 yen after it
said same-store sales at its Uniqlo casual clothing chain in
Japan surged 13.7 percent in November from a year earlier due to
strong sales of down jackets and winter underwear.
   It was the fourth-most traded stock on the main board by
turnover.
   Specialty steel makers rose, with Aichi Steel Corp 
gaining 3.6 percent after Credit Suisse upgraded the steelmaker
to 'outperform' from 'neutral', saying the inventory cycle for
specialty steel had likely bottomed and valuations were low. 
   Daido Steel Co Ltd rose 5.7 percent after the
brokerage initiated its coverage with a 'buy' rating, citing an
earnings recovery.
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