Nikkei falls to 2-week low on profit-taking, hopes for BOJ cap downside

Sun Mar 31, 2013 11:35pm EDT

* Nikkei falls 0.9 pct, Topix sheds 2 pct
    * Gains in Fast Retailing, TDK help limit downside
    * BOJ to hold policy meeting on April 3-4

    By Tomo Uetake
    TOKYO, April 1 (Reuters) - Japan's Nikkei share average fell
to a two-week low on Monday morning as investors took profit
after the benchmark posted its best quarterly performance in
nearly four years. 
    But expectations that the Bank of Japan will unveil
aggressive monetary policy measures this week to revive the
world's third-largest economy limited the fall. 
    The Nikkei eased 0.9 percent to 12,283.75 by the
midday break, after rallying 19.3 percent in January-March,
marking its best quarterly performance since April-June 2009, as
Prime Minister Shinzo Abe embarked on expansionary fiscal and
monetary policies.
    "Selling led by the futures market pushed down the
benchmarks today. Honestly, the decline was more than I
expected," said Yuya Tsuchida, a strategist of Toyo Securities. 
    "Although there wasn't any major market-moving events over
the weekend, investors made pre-emptive moves to lock in profits
in anticipation of bolder monetary easing announcements by the
Bank of Japan this week."
    But the underlying trend remained positive, he said. 
    Helped by the rally, Japanese equities now carry a 12-month
forward price-to-earnings ratio of 14.2, a level not seen since
July 2010 though still below the 10-year average of 16.4,
according to Thomson Reuters Datastream. 
    "There was a very large inflow (of programme trade) on
Friday afternoon ... I reckon the fair value absent of that
buying is at where we are," a senior trader at a foreign bank in
Tokyo said. 
    "Flow is very light out there today," he said. "I don't
think many people want to do much ahead of the BOJ on Thursday."
    The Bank of Japan will hold a two-day policy meeting
starting on April 3, its first under new Governor Haruhiko
Kuroda, an advocate of aggressive monetary policy.
 
    A BOJ survey showed big manufacturers' mood improved after
two straight quarters of deterioration, with the headline
sentiment index rising 4 points to minus 8. That was roughly in
line with a median market forecast of minus 7. 
    The start of Japan's financial year also weighed on the
market investors expected to book profits, traders said. 
    All of the 33 sectors retreated across the board on Monday,
with the index for land transport companies losing 4
percent, the worst performer.    
    Financials also fell, with Mitsubishi UFJ Financial Group
Inc losing 2.5 percent and Nomura Holdings Inc 
down 3 percent.
    However, index heavyweight Fast Retailing Co gained
1 percent, while TDK Corp and Tokyo Electron Ltd
 rose 2 percent and 1.4 percent, respectively.
    The broader Topix index ended the morning session 2
percent lower at 1,014.27.
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