Nikkei edges down as selling in exporters offsets U.S. Fed hopes

Tue Feb 26, 2013 8:24pm EST

* Nikkei erases opening gains on selling in exporters
    * Market cautious about uncertainty in Europe despite
positive local factors - analyst

    By Ayai Tomisawa
    TOKYO, Feb 27 (Reuters) - Japan's Nikkei share average edged
down on Wednesday, erasing earlier gains as selling in exporters
partially offset hopes for continuing U.S. Federal Reserve
stimulus. 
    The Nikkei dropped 0.4 percent to 11,356.06 after
opening a tad higher. The index fell 2.3 percent on Tuesday on
concerns an inconclusive election in Italy could reignite the
euro zone debt crisis, moving away from a 53-month high of
11,662.52 touched on Monday.
    Analysts said trading may remain choppy as sentiment is
divided between bulls who want to chase the market higher on
ongoing hopes for monetary easing and those who are wary of the 
uncertainty in Europe.
     "The Japanese market has been outperforming its global
peers since the beginning of this year. Although a weaker yen
has served as a tailwind to Japanese stocks, we were reminded
this week that the yen can still be bought as a safe haven
currency when fears emerged on European debt issues," said a
strategist at a European asset management firm.
    The dollar last traded at 92.13 yen, up from a
one-month low of 90.85 touched on Monday on worries that the
political deadlock in Italy could cause further instability in
debt-stricken Europe.
    "If the dollar holds above 90 yen, the market may not fall
sharply from the current line," the strategist said.
    The Nikkei has climbed 9.5 percent this year, while the
Standard & Poor's 500 Index has gained 5.0 percent and
the FTSEurofirst-300 index of top European shares has
only added 1.4 percent.
    While Japanese shares were supported by hopes the government
will nominate Asian Development Bank President Haruhiko Kuroda,
an advocate of monetary easing as its next central bank chief, a
correction may continue if the dollar hovers around the 92
yen-line, market observers said. 
    The yen, which has declined about 20 percent against the
dollar since November on Prime Minister Shinzo Abe's bold
reflationary policies, skidded to a 33-month low on Monday, with
the dollar reaching 94.77 yen.
    On Wednesday, exporters lost ground, with Toyota Motor Corp
 dropping 0.7 percent, Honda Motor Co shedding
0.9 percent and Nikon Corp falling 0.8 percent.
    The broader Topix dropped 0.7 percent to 960.43,
erasing earlier gains.
    "Even if there are negative factors from overseas continuing
to hurt sentiment, the Nikkei should be supported above its
25-day moving average (of 11,170) for the time being," said
Yutaka Miura, a senior technical analyst at Mizuho Securities.
    U.S. stocks climbed as Federal Reserve Chairman Ben Bernanke
strongly defended the Fed's bond-buying stimulus, easing worries
that policymakers might be getting cold feet about continuing
the extraordinary measures to support the economy.
    In Europe, a closely watched gauge of European stock market
volatility hit a 2013 high after the muddy election outcome in
Italy raised fresh concern about the outlook for the euro zone's
debt crisis.
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