Nikkei nears 3-month low after U.S. data spurs foreign selling

Mon Feb 3, 2014 9:46pm EST

* Nikkei hits lowest level since early-Nov, down 12.8 pct
YTD
    * Foreign players forced to sell after buying late last year
    * Nikkei falls below 200-day average for 1st time since Nov
'12
    * Exporters hit by rise in yen

    By Tomo Uetake
    TOKYO, Feb 4 (Reuters) - Japan's Nikkei stock average fell
on Tuesday morning, hitting the lowest level in almost three
months, after disappointing U.S. manufacturing data cast a pall
over Wall Street.
    The benchmark Nikkei shed as much as 3.4 percent to
14,121.05 before steadying to end the morning session 2.62
percent down at 14,236.59.
    After its stellar gains of 57 percent in 2013, the Nikkei
has dropped 12.6 percent since the start of this year to become
one of the worst performing markets.
    "What is of concern is that there appears to be a
substantial overhang of foreign ownership in the Japanese stock
market," said Stefan Worrall, director of equity cash sales at
Credit Suisse in Tokyo. 
    In a major bearish signal for chartists, the Nikkei fell
decisively below its 200-day moving average, around 14,425, for
the first time since November 2012 when the market started
rallying on expectations of radical monetary easing.
    "Many market players are trying to determine whether the
recent declines are just a short-term correction or a change of
tide in the market," said Kenichi Hirano, a strategist at
Tachibana Securities.
    But global investor sentiment was rocked by U.S. data
showing manufacturing activity slowed sharply in January on the
back of the biggest drop in new orders in 33 years, while
construction spending barely rose. 
    On Wall Street, the S&P 500 suffered its worst drop
since June.
    On the Nikkei, index heavyweight SoftBank Corp 
plunged as much as 5.8 percent at one point, adding to its 6.6
percent decline in the previous session, before bargain-hunting
by retail investors forced a sharp rebound. 
    The stock was the most traded stock on the main board and
last traded up 2.6 percent on the day, though it was still down
more than 20 percent so far this year.
    Other names with high foreign ownership also took a beating.
Mazda Motor Corp fell 5.4 percent.
    Currency-sensitive exporters came under pressure as the yen
 rose to 2 1/2-month high on safe-haven buying.
    Toyota Motor Corp, which will announce its
quarterly earnings results after the market closes, dropped 4.5
percent and was the third-most traded stock by turnover on the
Topix.
    Aside from Toyota, several major companies, including
Panasonic Corp, Sharp and Hitachi Ltd 
are set to announce quarterly results later in the day.
Nippon Paint Co Ltd nosedived as much as 14.9 percent
on dilution concerns after the paintmaker said it would issue
new shares.
   The broader Topix index was down 3.1 percent at
1,159.29 in heavy trade, with volume at 85.1 percent of the
fully daily average for the past 90 trading days.
    The JPX-Nikkei Index 400, an index launched this
year comprised of firms with high return on equity and strong
corporate governance shed 3 percent to 10,509.44.
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