Nikkei eases but investors cautious, bide time as BOJ meets

Mon Jan 21, 2013 10:31pm EST

* Investors cautious ahead of BOJ announcement
    * Sony in focus on new tablet news
    * Toshiba rises after broker upgrade
    * Olympus up, takes step to remove TSE warning

    By Tomo Uetake
    TOKYO, Jan 22 (Reuters) - The Nikkei share average eased on
Tuesday as investors awaited the outcome of a Bank of Japan
policy meeting which is expected to set a 2 percent inflation
target, double the current figure, and introduce more aggressive
easing steps to boost growth.
    The BOJ is also widely expected to bump up its budget for
asset purchases and discuss scrapping the interest it pays on
banks' reserves, according to sources familiar with the central
bank's thinking.
    The Nikkei fell 0.4 percent to 10,704.09 by the
midday break, retreating for a second day in a row from Friday's
nearly three-year closing high, with investors unwilling to play
their hands before the BOJ announcement.
    "It's quite difficult for the market to move in one
direction before the BOJ announcement. The market is closely
monitoring what they are going to say after today's meeting,"
said Shun Maruyama, chief Japan equity strategist at BNP Paribas
    "If BOJ governor Shirakawa hints that the central bank has
secured its independence, I think the yen could strengthen. On
the other hand, if he changed his attitude, the yen could
soften. Anyway, the stock market is going to be very sensitive
to moves in the forex market," Maruyama added.
    Investors have been girding for the BOJ decision since
mid-November when Shinzo Abe, then the leading candidate to win
a general election and now prime minister, began calling for
aggressive easing, helping to weaken the yen. That boosted
exporters and sparked a 26 percent rally in the Nikkei.
    Some think the market has become overbought as a result,
with the BOJ meeting a ripe opportunity for a correction. The
Nikkei's up-down ratio, or the 25-day moving average of gainers
divided by the 25-day average of losers, stood at 146.85, well
above the 120-mark that signals an overheated market.
    "I think the yen's weakening is pretty much over, which
means the Nikkei's run is also over," said Fumiyuki Nakanishi,
general manager of investment and research at SMBC Friend
    The yen was still off its 2-1/2 year low against the dollar
hit on Monday morning, trading at 89.43 yen.
    However, Nakanishi said the market would remain firm, albeit
with a different focus.
    "Exporters are overbought and attention is now going to
switch to domestic companies as the supplementary budget is
discussed in the Diet, which opens again on Jan. 28," he added. 
    On Tuesday morning, Sony Corp remained in focus,
gaining as much as 3.3 percent on the back of a report in the
Nikkei business daily that it would launch a new version of its
Xperia tablet in Japan this spring after halting sales last year
due to problems.
    Sony topped the main board as the most-traded stock by
turnover for a third day, after news on Friday that its U.S.
subsidiary would sell its New York headquarters building, with
$685 million of the sale to be recorded as operating income. 
    Toshiba Corp rose as much as 3.3 percent to 379
yen, its highest in nearly 10 months, after J.P. Morgan raised
its rating to "overweight" from "underweight", citing
expectations of strong earnings on a softer yen. 
    "The depreciation of the yen should significantly boost the
profitability of the NAND business," J.P.Morgan said in a note. 
    The broader Topix fell 0.5 percent to 900.60 in
relatively active trade in the morning session, with 72 percent
of its full daily average for the past 90 trading days.
    Other notable gainers included Olympus Corp, up 6
percent at 1,973 midday after UBS Securities started its
coverage with a "buy" rating and a target price of 3,000 yen,
against Monday's close of 1,862 yen.
    The company on Monday submitted to the Tokyo Stock Exchange
a written affirmation on its internal control systems as
stipulated in the securities listing regulations, which, if
approved, will see the camera maker's "securities on alert"
status lifted. It was placed on that status following an
accounting scandal that broke in late 2011.
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California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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