Nikkei falls below 14,000 as exporters drag on strong yen; Fed, China data eyed
* Exporters take a hit as dollar stays below 98 yen * Many macro events, earnings in focus * China slowdown a risk to Japanese market - analyst * Fanuc shines as weak profit priced in By Ayai Tomisawa TOKYO, July 29 (Reuters) - Japan's Nikkei share dropped bellow 14,000 for the first time in almost a month as exporters were hit by the yen's strength against the dollar, while caution ahead of Chinese manufacturing data and the U.S. Federal Reserve policy statement this week sidelined investors. The Nikkei dropped 1.7 percent to 13,886.76 in mid-morning trade after hitting as low as 13,860.16, the lowest level since July 1. Toyota Motor Corp dropped 2.6 percent and was the most traded stock by turnover, while Honda Motor Co shed 2.1 percent and Sony Corp fell 2.2 percent after the dollar traded at a four-week low of 97.79 on Monday. A higher yen tends to make export-reliant Japan's products less competitive in the global market, and lowers the profits when repatriated. The Topix dropped 2.4 percent to 1,139.47. Analysts said that investors are reluctant to take positions before big events at home and abroad this week. "A sense of caution is looming in the market, especially because investors are worried about a slowdown in the Chinese economy. And when they see a risk in Asia, they tend to buy the yen, and the Japanese market is hit by that," said Kyoya Okazawa, head of global equities at BNP Paribas, adding that the market is bracing for weak manufacturing data in China later this week. A weak China PMI result will only heighten fears of a hard landing for the world's second largest economy. China is Japan's second major export market. In the United States, investors will scrutinize the Federal Open Market Committee policy statement this Wednesday for any additional clues about the Fed's intended timeline for scaling back its quantitative easing. The market is also focused on jobs data to be released on Friday. "It's hard to take positions until we see the data outcome," Okazawa said. EARNINGS ON FOCUS Fanuc Corp bucked the broad market weakness and rose 3.3 percent despite a 36 percent fall in its operating profit for the April-June quarter as the figure was in line with market expectation, market participants said. "Most foreign investors have this stock in their portfolios because demand for factory automation will rise in the long-term while Chinese people's wages increase. The weak result was already priced in the market," said an analyst. KDDI Corp, which is reporting its results on Tuesday, rose as much as 2.2 percent after the Nikkei newspaper said the mobile operator was expected to post a record-high April-June operating profit of around 160 billion yen ($1.6 billion), up 70 percent from a year ago. Nomura Securities said that 40 companies in the Russell/NOMURA Large Cap Index had released their first-quarter results as of July 26, equivalent to 14 percent of the total. Sales at these companies rose 8.4 percent on year, while recurring profits rose 12.3 percent, Nomura said. "Although this is an extremely limited sample size, we note that FY12 Q4 results for the same universe showed sales growth of 5.5 percent and recurring profit growth of 2.9 percent. As such, there has been an upturn in both sales and profit momentum in FY13 Q1," Nomura wrote in a report. On Monday, Komatsu Ltd, Hitachi Construction Machinery Co and Sumitomo Mitsui Financial Group will report their first-quarter results. "Unless companies cut their full-year outlooks, there shouldn't be big negative surprises," said Hisao Matsuura, a strategist at Nomura.
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