Nikkei falls for 2nd day after Fed minutes support tapering; China PMI a focus

Wed Feb 19, 2014 8:55pm EST

* Market cautiously await China PMI data
    * Profit-taking from Tuesday's gains still ongoing - traders
    * Japan's record high trade deficit widely expected -
analysts

    By Ayai Tomisawa
    TOKYO, Feb 20 (Reuters) - Japan's Nikkei share average fell
for a second day following declines on Wall Street as minutes of
the U.S. Federal Reserve's latest policy-setting meeting
indicated it will keep trimming its stimulus. 
    Market players said many investors are also staying on the
sidelines ahead of the release of the preliminary February China
Purchasing Managers' Index (PMI) from HSBC/Markit later on
Thursday. 
    The Nikkei shed 0.8 percent to 14,643.01 in
mid-morning trade, after falling 0.5 percent to 14,766.53 on the
previous day. 
    Analysts said some investors have been taking profit
following gains on Tuesday. The benchmark ended up 3.1 percent
that day, the highest close since Jan. 31, after the Bank Of
Japan said it would extend its loan facilities by a year.  
    "People have realized that the market overreacted to the
BOJ's announcement," said Masashi Oda, chief investment officer
at Sumitomo Mitsui Trust Bank. "Those who bought then are still
selling."
    Japanese exporters were weaker on Thursday despite the
dollar's strength as some risk-averse investors trimmed their
positions. Honda Motor Co fell 2.4 percent, Canon Inc
 dropped 1.3 percent, while Panasonic Corp 
slipped 1.2 percent.
    The dollar was up 0.1 percent at 102.40 yen, having
pulled back from a low of 101.84 the previous day.
    Banks also lost ground, with Mitsubishi UFJ Financial Group
 falling 1.1 percent and Mizuho Financial Group 
down 0.9 percent.
    The Topix dropped 0.8 percent to 1,209.19, with its
32 of 33 subsectors in negative territory.
    On Wednesday, minutes from the January meeting of the
Federal Reserve's policy-setting committee showed several
policymakers wanted to stick to the idea that their
asset-purchase program would be trimmed in predictable,
$10-billion steps unless there is a big economic surprise this
year.
    Japan logged a record trade deficit in January as a weak yen
pushes up the cost of imports and as export demand slowed, the
Ministry of Finance (MOF) data showed on Thursday.
 
    "Analysts had been expecting that Japan's trade deficit
would hit a record since last week as the country needs to
import fuel after its nuclear power plants stopped operating,"
said Masanaga Kono, senior strategist at Amundi Japan. "The
impact from the data is limited."
    The JPX-Nikkei Index 400, an index launched this
year comprising firms with high returns on equity and strong
corporate governance, dropped 1.1 percent to 10,909.87.
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