Japan shares weighed down by weak China factory activity report

Thu Jan 23, 2014 1:12am EST

TOKYO, Jan 23 (Reuters) - The Nikkei stock average reversed
early gains to end 0.8 percent lower on Thursday after a survey
showed manufacturing activity in China, one of Japan's top
trading partners, contracted in January for the first time in
six months. 
    The Nikkei ended 125.07 points lower at 15,695.89,
breaking below its five-day moving average of 15,737.79.
    Before the release of the disappointing flash Markit/HSBC
Purchasing Managers' Index survey, the benchmark had risen as
high as 15,958.58 to a two-week peak and near the 16,000-mark it
had crossed last month for the first time in six years.
  
    "They are in the middle of a reform right now to fix shadow
banking ... to open markets to the private sector," said Kyoya
Okazawa, head of global equities and commodity derivatives at
BNP Paribas in Tokyo. "In the middle of those reforms, those PMI
numbers are going to be quite bumpy." 
    "The second half is probably going to be better. The first
half will be a little bit subdue," he added.
    The Nikkei has gotten off to a soft start this year after
rallying 57 percent in 2013, its best annual rise since 1972.
    The broader Topix index closed down 0.9 percent at
1,287.52, with 2.91 billion shares changing hands, the highest
in a week.
    The JPX-Nikkei Index 400, a recently introduced
gauge comprised of companies with a high return on equity and
robust corporate governance, fell 0.9 percent to 11,625.77.