Nikkei falls as exporters and financials weigh, GS Yuasa tumbles
* Euro-sensitive exporters underperform * GS Yuasa tumbles on Mitsubishi Motors' battery overheating By Ayai Tomisawa TOKYO, March 28 (Reuters) - Japan's Nikkei share average dropped on Thursday with exporters and financials falling on profit-taking as sentiment was hit by weakness in the euro due to concerns about Italy's funding costs and the rescue deal for Cyprus. The Nikkei dropped 1.6 percent to 12,298.61 by the midday break, staying below its five-day moving average of 12,429.80 and moving away from a 4-1/2-year high of 12,650.26 struck last Thursday. Exporters with high exposure to the euro zone such as Mazda Motor Co and Sony Corp underperformed, falling 2.8 percent and 3.8 percent, respectively, after political uncertainty in Italy drove its borrowing costs to five-month highs. Among financials, Mitsubishi UFJ Financial Group dropped 2.7 percent and Mizuho Financial Group shed 3.4 percent. The euro last traded at 120.27 yen after dipping to a one-month low around 119.95 yen. "We have major events to look forward to next week (in Japan), so investors may not build large positions this week, and worries about Europe are souring the mood," said Kenichi Hirano, a strategist at Tachibana Securities. GS Yuasa Corp, which makes lithium-ion batteries for Boeing Co's 787 Dreamliner jet and for some automakers, tumbled 12 percent after Mitsubishi Motors Corp said a lithium-ion battery in its plug-in hybrid Outlander vehicle overheated last week. The automaker shed 4.9 percent. The broader Topix index dropped 1.5 percent to 1,030.96. Next week, the Bank Of Japan's quarterly tankan survey of corporate sentiment is due out on Monday, while the central bank's first policy meeting under its new leadership will be held April 3-4. BOJ Governor Haruhiko Kuroda said in the upper house of parliament on Thursday that the central bank would consider buying longer-dated Japanese government bonds and other risk assets in a balanced way and would continue monetary easing until the 2 percent inflation taget is achieved. On Wednesday, people familiar with the BOJ's thinking told Reuters that the central bank was likely to start open-ended asset purchases immediately rather than in 2014 and consider setting a new target to buy longer-dated bonds at next week's meeting. Analysts said stocks were expected to rise again after new funds flow in to the market as the new fiscal year starts on April 1, adding that domestic institutional investors may remain sellers until Friday, the last day of trade this fiscal year. "Investors are adjusting their positions as the Nikkei has gained sharply in a short period of time," said Nobuhiko Kuramochi, a strategist at Mizuho Securities. The Nikkei has gained 18 percent this year on Prime Minister Shinzo Abe's bold monetary and expansionary policies, lifting exporters and such reflationary stocks as banks and real estate stocks. During the term, the benchmark S&P 500 has gained 9.6 percent, the Dow Jones industrial average has added 11 percent and the FTSEurofirst 300 index has advanced 4.4 percent.
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