Nikkei expected to extend losses on China, Fed worries

Mon Jun 24, 2013 7:35pm EDT

TOKYO, June 25 (Reuters) - Japan's Nikkei share average is
set to trade below 13,000 on Tuesday, as sentiment remains
depressed by worries about stress in China's banking system and
the U.S. Federal Reserve's plans to roll back its stimulus later
this year. 
    Traders expect the weaker yen to help limit the downside.
    Market players said the Nikkei was likely to trade between
12,900 to 13,200 on Tuesday after falling 1.3 percent to
13,062.78 on Monday.
    Nikkei futures in Chicago closed at 13,020, up 0.08
percent from the close in Osaka of 13,010.
    The benchmark Nikkei has dropped 18 percent since reaching a
5-1/2-year high on May 23, hurt by slowing growth in China, Fed
stimulus concerns and disappointment over the Japanese
government's recently unveiled growth strategy. 
    Analysts say the mood is likely to remain subdued as a
recent spike in interbank borrowing costs have raised fears that
stress in China's banking system could weigh on already slowing
growth. 
    "As the Japanese market dropped on the China concern the day
before, it may not see a big sell-off today, but investors are
hesitant to take positions, and low volume is reflecting their
risk-averse stances," said Kenichi Hirano, a strategist at
Tachibana Securities.
    On Monday, there were only 1.63 billion shares changing
hands on the Topix, the lowest level since mid-December.
    Analysts also said that the market remains under pressure on
concerns that U.S. monetary stimulus will be scaled back in the
near term.
    "There are few negative factors in the domestic market, but 
global worries are keeping investors from taking positions,"
Hirano said.
    Market players, however, expect losses to be contained as
the dollar is trading around 97-98 yen, which is higher than the
90-95 yen range that most companies have based their earnings
for this fiscal year. A weaker yen lifts exporters'
competitiveness in overseas markets and their earnings when
repatriated. 
    
> Wall Street ends down but off lows as bond prices gain   
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> Treasuries rebound, yields fall from near 2-yr highs    
> Gold down 1 pct on China fears, Wall St margin calls   
> Oil ends up, off 3-week low as Canada floods threaten US
imports 
    STOCKS TO WATCH
    
    --Panasonic Corp 
    Panasonic's solar cell sales volume will grow 25 percent on
the year to 675,000kw for fiscal 2013 as more households and
stores respond to rising electricity rates by installing solar
panels, the company said Monday.