Nikkei set to extend losses as Fed exit plan roils markets
TOKYO, June 21 (Reuters) - Japan's Nikkei average is expected to open lower on Friday, taking its cue from a shakeout in global markets overnight as investors fretted about the Federal Reserve's plan to scale back massive stimulus in coming months if the U.S. economy improves. The Nikkei is likely to trade between 12,600 and 13,000 after dropping 1.7 percent to 13,014.58 in the previous session, strategists said. The broader Topix index fell 1.3 percent to 1,091.81 on Thursday. Nikkei futures in Chicago closed at 12,805 on Thursday, down 1.7 percent from the Osaka close of 13,030. "It's impossible to avoid the intensive trend of risk aversion. The Tokyo market will drop today," said Takashi Hiroki, chief strategist at Monex Inc. "But the downside will be limited. The Tokyo stock exchange already reacted sharply yesterday." Hiroki said when investors were on "risk-off" mood in the past, the yen would strengthen against the dollar, but the dollar has firmed this time, which will support Japanese equities as a softer yen will benefit the shares of exporters. Global equity markets, bond prices and commodities fell sharply on Thursday as investors struggled to come to terms with the Fed's plan to eventually stop pumping cheap money into the economy next year - removing liquidity support that has underpinned financial assets in recent years. The benchmark Nikkei has lost 18.4 percent since hitting a 5-1/2 year peak on May 23 on concerns over Fed stimulus as well as slowing growth in China, Japan's second-largest export market, and disappointment over Prime Minister Shinzo Abe's recently unveiled growth strategy to revive the economy. Japanese equities' 12-month forward price-to-earnings has also come down sharply, from a three-year high of 16.3 reached three weeks ago to 13.6, a level not seen since the Bank of Japan launched radical monetary stimulus steps in early April, according to Thomson Reuters Datastream. Still, the index is up 5.3 percent since the BOJ announcement and has risen 25 percent this year, underpinned by the sweeping government efforts to pull the economy out of two decades of stagnation. > Wall St plunges, S&P posts biggest drop since Nov 2011 > Dollar gains across the board on Fed outlook, U.S. data > U.S. bond market slides as Fed plans become clearer > Gold dives 5 pct in global market rout on Fed fears > Oil hit by biggest decline since November on Fed plan STOCKS TO WATCH --SOFTBANK CORP Sprint Nextel Corp, which SoftBank is trying to taking control, raised its buyout offer for Clearwire Corp to $5 per share on Thursday and announced support from a key group of dissident shareholders, trumping rival suitor Dish Network Corp. --ITOCHU CORP, MITSUI & CO LTD Japanese trading houses Itochu and Mitsui will invest a combined $1.5 billion in BHP Billiton's Jimblebar iron ore mining hub in Australia, the world's largest miner said on Thursday. --MITSUBISHI UFJ FINANCIAL GROUP The Bank of Tokyo-Mitsubishi UFJ, owned by Mitsubishi UFJ Financial Group, has agreed to pay New York state $250 million for deleting information from $100 billion in wire transfers that authorities could have used to police transactions with sanctioned countries like Iran. --NOMURA HOLDINGS Nomura, Japan's biggest brokerage firm, flagged redundancies in its Australian equities team, in an internal memo seen by Reuters.
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