Nikkei falls, investors wary of potential yen criticism at G20

Thu Feb 14, 2013 10:40pm EST

* Banks, carmakers sold on uncertainty about yen direction
    * Rakuten, Yamaha Motor fall on weak earnings
    * Financials move further away from recent highs
    * Nikkei faces a 2nd straight weekly loss

    By Tomo Uetake
    TOKYO, Feb 15 (Reuters) - Japan's Nikkei share average
dropped in morning trade on Friday as investors pared exposure
to exporters and banks while awaiting a Group of 20 meeting
where the yen's level will be a focus.
    Finance ministers from G20 nations this weekend meet in
Moscow, where they are expected to discuss Japanese economic
policies, which have fuelled the yen's sharp decline against the
dollar since November.
    "You need to be brave to buy today as there is great
uncertainty about what is going to come out at the G20," said
Shigeo Mito, manager of equity investment at Sumitomo Mitsui
Trust. 
    "It will be difficult to weaken the yen further if Japan's
economic policies are described as currency manipulation by
foreign officials," he added.
    The Nikkei fell 0.9 percent to 11,207.93 by the
midday break. A full-day fall of 1.4 percent or more would mean
a second straight week of losses following 12 consecutive weekly
gains - the longest winning streak since 1959.
    The Topix index underperformed the Nikkei, dropping
1.5 percent to 940.52 in the morning session. 
    Some analysts said they had expected lower volume on
uncertainty ahead of the G20 meeting, but trading on the main
board was relatively active, reaching 83.7 percent of its
full-day average over the past 90 trading sessions.
    "A lot of stocks that were driven up by margin trading are
now falling as people cut their losses after calls," said Yasuo
Sakuma, portfolio manager at Bayview Asset Management.
    "It looks like those stocks, along with the Mothers index
that is so popular among retail investors, have peaked out," he
said. "In the short term, selling could result in more selling."
    The Mothers index, made up of small to mid-sized
companies and emerging stocks, slid 5.5 percent on Friday
morning, leaving it 20.3 percent lower than a four-year high of
604.36 hit on Jan. 29. 
    Financials that have gained from the rally were in the
firing line on Friday , with Mizuho Financial Group Inc 
shedding 4.3 percent as the top-traded share by turnover on the
main board, pulling further away from a four-year high hit on
Tuesday.
    Automakers, whose share prices had jumped on expectations of
higher overseas revenue due to the yen's weakness, were also
sold off as some investors thought the one-way bet on the yen
against the dollar and euro was losing momentum. 
    Mazda Motor Corp, Toyota Motor Corp and
Honda Motor Co Ltd dropped between 2.6 and 4.4 percent.
    Bank of Japan Governor Masaaki Shirakawa defended the
central bank's aggressive monetary expansion on Thursday, saying
it was aimed at reviving the economy, not at weakening the yen. 
 
    Investors remain wary. The yen swung sharply up against the
euro after data showed the euro zone fell deeper into recession
in the last three months of 2012. The contraction made 2012 the
region's first year without a single quarter of growth since
1995. 
    "It's possible that the weakness of the euro zone's economy
is due to the strengthening of the euro," said Masayuki Doshida,
senior analyst at Rakuten Securities. 
    "Still, the only thing that might support the market today
is buying stocks on the dip, but the general mood is one of
wait-and-see before the G20." 
    Yamaha Motor Co Ltd fell 7.1 percent to a
three-week low after its operating profit forecast for the year
ending Dec. 31 fell short of consensus estimates due to slowing
motorcycle sales in emerging countries. 
    Online shopping site operator Rakuten Inc dropped
4 percent after its full-year operating profit came in below
analysts' expectations. 
    Matsumoto Kiyoshi bucked the market, rising 6.8
percent to a 3-1/2-year high after the domestic pharmacy
operator announced a commemorative dividend of 10 yen per share
on Thursday for its 80-year anniversary, bumping its annual
dividend up to 50 yen.