Nikkei slips, currency-sensitive stocks weigh; Italy vote uncertainty

Wed Feb 27, 2013 2:47am EST

* Automakers, banks weigh on Nikkei
    * Domestic demand-related stocks up on bargain-hunting

    By Tomo Uetake
    TOKYO, Feb 27 (Reuters) - Japan's Nikkei average dropped for
a second straight day on Wednesday as a pause in the yen's
weakening after an inconclusive Italian election prompted
investors to offload currency-sensitive stocks that have
outperformed recently.
    The Nikkei lost 1.3 percent to 11,253.97 after
shedding 2.3 percent on Tuesday on concerns that political
deadlock following the Italian election could reignite the euro
zone debt crisis. The benchmark ended at a 53-month high on
Monday.
    The dollar was traded at 91.87 yen, not far from a
one-month low of 90.85 touched on Monday on safe-haven flows to
the Japanese currency in the aftermath of the inconclusive
Italian vote.
     Comments from U.S. Federal Reserve Chairman Ben Bernanke on
Tuesday helped alleviate some market concerns about an early end
to the Fed's bond buying programme, which also somewhat cooled
demand for the greenback. 
     Automakers were sold off. Toyota Motor Corp, the
most-traded stock on the mainboard by turnover, fell 2.5
percent, Subaru maker Fuji Heavy Industries Ltd dropped
3.3 percent and Honda Motor Co lost 2.5 percent. 
    "Today's trading was characterised by sector rotation," said
Naoki Fujiwara, chief fund manager at Shinkin Asset Management.
    "Investors, mainly the hot-money kind, offloaded
currency-sensitive automakers while buying shares which have
been underperforming, such as domestic demand-related stocks." 
    Banks also lost ground, with Sumitomo Mitsui Financial Group
 down 3 percent and Mitsubishi UFJ Financial Group
 off 2.7 percent.    
    The paper and pulp sector was the best sectoral
performer, up 1.3 percent, while the construction sector
 rose 0.8 percent after the government on Tuesday
passed a 13 trillion yen ($142 billion) supplementary budget for
the year ending March 31 to finance economic stimulus.
     "The Japanese market has been outperforming its global
peers since the beginning of this year," said a strategist at a
European asset management firm.
    "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."
    The strategist said if the dollar held above 90 yen, the
market may not fall sharply from the current level.
    The broad Topix lost 1.4 percent to 953.72, with
3.12 billion shares changing hands, down from Tuesday's 3.9
billion shares.
    Bucking the broad market, Jupiter Telecommunications Co
 surged 10.7 percent after KDDI Corp and
Sumitomo Corp raised the price of their tender offer to
buy the cable service operator by 12 percent to 123,000 yen per
share.
    "The Nikkei is likely to stay direction-less for the moment.
But if the yen weakens further, 95-96 yen or all the way towards
100 yen, the Nikkei would rise again and hit 12,000," said
Kenichi Hirano, a market analyst at Tachibana Securities.
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