Nikkei falls below 13,000 on worries about financial stress in China

Mon Jun 24, 2013 9:20pm EDT

* China-related stocks underperform
    * Investors await cues from China markets
    * Fed tapering still pressuring market - analyst

    By Ayai Tomisawa
    TOKYO, June 25 (Reuters) - Japan's Nikkei share average fell
below 13,000 on Tuesday morning, as sellers were encouraged by
lingering worries about stress in China's banking system and the
U.S. Federal Reserve's plans to roll back its stimulus later
this year.  
    The Nikkei fell 0.6 percent to 12,978.90 after
opening marginally higher.
    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. 
    Manufacturers with high exposures to China lost ground, with
Komatsu Ltd falling 2.8 percent, Hitachi Construction
Machinery Co shedding 2.0 percent and Nissan Motor Co
 dropping 0.9 percent.
    "Investors are waiting for the Chinese market to open and
want to decide what positions they should take," said Toshihiko
Matsuno, chief strategist at SMBC Friend Securities. "There is
relatively smaller volatility in the market today, but the
direction could go either way depending on cues from China."
    The benchmark Nikkei has dropped more than 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 expect steep falls for Japanese equities are
unlikely during the session given that concerns over China had
already dented the market in the previous day. 
    The Topix dropped 0.8 percent to 1,080.98.
    Analysts also said the market remains under pressure on
concerns that U.S. monetary stimulus will be scaled back in the
near term. The Federal Reserve last week confirmed plans to
scale back the amount of cheap money being pumped into the U.S.
economy later this year, sending global risk assets skidding
sharply. 
    "There are few negative factors in the domestic market, but 
global worries are keeping investors from taking positions,"
Kenichi Hirano, a strategist at Tachibana Securities 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.
    Exporters were mixed on Tuesday, with Toyota Motor Corp
 falling 0.4 percent, Nikon Corp adding 0.7
percent while Sony Corp was down 0.2 percent.
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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