Nikkei slides over 2 pct on Ukraine tensions, stronger yen

Sun Mar 2, 2014 8:37pm EST

* Strong yen drags down exporters, index heavyweights
    * Fast Retailing outperforms, sources say it's interested in
J.Crew
    * Nikkei likely be supported at 14,000 in midterm - trader

    By Ayai Tomisawa
    TOKYO, March 3 (Reuters) - Japan's Nikkei average slid more
than 2 percent to a 1-1/2-week low on Monday as escalating
tensions in Ukraine sparked risk aversion and a stronger yen
roughed up exporters like Toyota Motor Corp and Canon
Inc.
    The Nikkei was down 2.4 percent at 14,478.87 in
midmorning trade, its lowest since Feb. 20. The index extended
losses into a fourth day.
    Ukraine mobilised for war on Sunday and Washington
threatened to isolate Russia economically, after President
Vladimir Putin declared he had the right to invade his
neighbour, in the biggest confrontation between Russia and the
West since the Cold War. 
    "In the midterm, geopolitical tension in Ukraine should
weigh on people's minds," said a senior trader at a foreign
brokerage. "Going forward, 14,000 will be a relatively firm
bottom-line for the Nikkei, and even if it falls below that,
it's going to be very short-term."
    In the long term, when worries about political tensions in
Ukraine ease, the Japanese market may stay flat until there are
more clues about companies' forecasts for the next fiscal year
as well as the impact of the April sales tax increase and how it
affects the economy, he said.
    "People have been complacent regarding Japan because of
uncertainty of the timing of potential further monetary easing,"
he said.
    Fast Retailing Co outperformed, rising 0.7 percent
earlier, after sources said the operator of Uniqlo clothing
stores is exploring a deal for U.S. apparel chain J.Crew Group
Inc. It last traded 0.5 percent lower.
    Exporters were weaker on the back of a stronger yen, with
Toyota Motor Corp falling 2.5 percent, Canon Inc
 shedding 2.3 percent and Sony Corp tumbling 3
percent.
    Index heavyweight stocks also weakened, with SoftBank Corp
 falling 3.3 percent and KDDI Corp dropping 2.6
percent.
    The dollar fell as low as 101.30 yen in early trade,
its weakest since Feb. 6, and last traded at 101.57 yen, about
0.2 percent below levels seen late last week.
    The Topix dropped 2.5 percent to 1,182.01, with 32
of its 33 subindexes in negative territory.
    The JPX-Nikkei Index 400, an index launched this
year comprising firms with high return on equity and strong
corporate governance, dropped 2.4 percent to 10,707.46.
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