Nikkei drops as Fanuc weighs after weak China sales data

Mon Feb 18, 2013 9:04pm EST

* Bridgestone pulls up tyre companies on strong earnings
    * Machine tool orders for China weigh on index
    * Social gaming companies in the spotlight

    By Sophie Knight
    TOKYO, Feb 19 (Reuters) - Japan's Nikkei share average edged
down in early trade on Tuesday as investors awaited the
appointment of a new Bank of Japan governor, while Fanuc Corp
 weighed after data showed a sharp drop in machine tool
orders to China.
    The broader Topix edged up 0.3 percent to 965.59 as
a softer yen continued to support exporters and stellar profits
for tyre maker Bridgestone Corp helped the rubber
sector jump 6 percent. 
   Bridgestone's stock soared 9 percent to hit its highest in
nearly six years after the tyre maker announced a 50 percent
increase in its operating profit for the year ended Dec. 31, and
overshot analysts' estimates with its current year profit
forecast. The stock was the second-most-traded on the main
board.
     Industrial robotics maker Fanuc lost 3.8 percent, taking 23
points off the benchmark, after the Japan Machine Tool Builders
Association said orders to China had dropped 65 percent in
January compared to the previous year. 
    The Nikkei edged down 0.2 percent to 11,392.40, after
jumping 2.1 percent on Monday to near a 4-year high struck on
Feb. 6, when BOJ governor Masaaki Shirakawa said he would leave
his post three weeks early for his successor to take his place.
   The consensus among market players is that the appointment of
the new governor is the next big event to determine the
direction of the stock market and the yen. On Tuesday, however,
analysts said a lack of immediate incentives left investors
focusing on individual stocks.     
    "A sense of 'wait-and-see' is going to pervade today," said
Masayuki Doshida, senior market analyst at Rakuten Securities.
    "Although people are relieved that Japan 'passed the test'
of the G20, there are risks on the horizon: Will people continue
buying the dollar and the euro with Walmart earnings, the E.U.'s
PMI and the Italian election on the horizon?"
    Concerns about the euro zone's economic outlook were
exacerbated after European Central Bank president Mario Draghi
said on Monday the euro's appreciation added downside risks to
price stability.
    Japanese exporters have benefited from the yen's 20 percent
fall against the common currency since November, when Shinzo
Abe, then a candidate for the opposition leader and now prime
minister, began calling for a weaker yen.
    The yen dipped a little further against the dollar at the
weekend after Abe's economic policies escaped direct criticism
at a meeting of G20 policymakers in Moscow at the weekend, which
investors took as a green light for Japan to continue with its
aggressive monetary easing. 
    However, some analysts questioned whether the currency will
continue to slide at the same speed as it has over the last
2-1/2 months.
    "The yen has paused today, and its direction from here on
has become a little less unclear, particularly if the U.S.
begins to complain about the falling competitiveness of its auto
industry," said Fumiyuki Nakanishi, general manager of
investment and research at SMBC Friend Securities.
    "But it's unlikely to return to 80 yen against the dollar
and even if it firms I expect exporters will be supported by
dip-buying." 
    With automakers taking a breather after seeing robust gains
on Monday, social gaming network providers Gree Inc and
DeNA Co Ltd were in the spotlight. Gree jumped 5.2
percent after the social gaming network provider said it would
buy back 1 percent of its shares, spending up to 3 billion yen,
($32 million) while DeNA was the third-most-traded share on the
main board, though its share price was flat.
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