Nikkei drops to 1-month low as China PMI impact drags; Daiichi Sankyo tumbles

Thu Jan 23, 2014 9:06pm EST

* Daiichi Sankyo falls on U.S. FDA's ban on Ranbaxy
    * Nitto Denko soars on strong monthly sales, Citi's target
    * Eyes on U.S. Fed's policy meeting - analyst

    By Ayai Tomisawa
    TOKYO, Jan 24 (Reuters) - Japan's Nikkei share average
dropped to a one-month low on Friday morning as weak Chinese
manufacturing activity data continued to hurt sentiment -
keeping the market risk-averse before the U.S. Federal Reserve's
policy-setting meeting next week.
    Friday's notable losers included Daiichi Sankyo Co,
which tumbled 5.8 percent to a near three-month low of 1,901 yen
after the U.S. Food and Drug Administration said it had banned
more products from Daiichi Sankyo's Indian subsidiary Ranbaxy
Laboratories from entering the United States due to
manufacturing violations.
    Daiichi Sankyo said it is now confirming the situation with
    Nitto Denko swam against the tide, rising 10 percent to
4,680 yen, its highest since Dec 11. It was the eighth-biggest
traded stock by turnover after it reported strong December
monthly sales for materials used in flat panel screens and
tablet devices. Citigroup raised its target price to 5,400 yen
from 5,200 yen.
    The Nikkei dropped 1.7 percent to 15,431.85 in
mid-morning trade after falling to as low as 15,377.64, the
lowest since Dec 18. The index is about to fall below 15,337.99,
a 38.2 percent retracement of the rise to a December high from a
October low. On Dec. 30, the Nikkei reached as high as
16,320.22, the highest level in six years.
    Analysts said investors have avoided taking risks for mainly
two reasons - weaker-than-expected December U.S. jobs data and
disappointing manufacturing data in China released on Thursday.
    "Sentiment was already poor because of the poor U.S. jobs
data released early this month, and it was exacerbated by the
Chinese figures," said Naoki Kamiyama, head of Japan equity
strategy at Bank Of America Merrill Lynch. "The market is very
cautious about the next U.S. jobs data to be released in two
weeks. If the market is disappointed again, the Japanese market
may enter a correction phase."
    He noted that investors were focused on the Fed's next
policy meeting, scheduled for January 28-29, to be quickly
followed by Chairman Ben Bernanke's handover to current Vice
Chair Janet Yellen on January 31. 
    The Topix dropped 1.3 percent to 1,270.89.
    Exporters were lower as the dollar neared a two-week low of
102.97 yen. Toyota Motor Corp shed 1.3 percent,
Honda Motor Co dropped 1.4 percent while Panasonic Corp
 fell 2.4 percent. (A stronger yen erodes Japanese
exporters' overseas earnings when repatriated.)
    The JPX-Nikkei Index 400, which started trading
in January, shed 1.3 percent to 11,471.99.