Nikkei drops on soft U.S. manufacturing, Ukraine woes; small shares limit declines

Mon Mar 24, 2014 10:04pm EDT

* Nikkei stays below its 200-day moving average
    * Trading subdued amid lack of positive catalysts near
fiscal year end - fund
    * Small caps attract retail buying on individual news

    By Ayai Tomisawa
    TOKYO, March 25 (Reuters) - Japan's Nikkei share average
dropped on Tuesday morning as the seemingly intractable crisis
in Ukraine and soft U.S. manufacturing activity weighed on
sentiment, though gains in small-sized companies limited the
losses.
    The benchmark Nikkei shed 0.2 percent to 14,442.88,
trading below its 200-day moving average of 14,509.71. It soared
1.8 percent on Monday.
    Ukraine announced the evacuation of its troops from Crimea,
essentially yielding the region to Russian forces, which seized
a Ukrainian marine base.
    U.S. President Barack Obama and major industrialised allies
warned Russia on Monday it faces additional economic sanctions
if President Vladimir Putin takes further action to destabilise
Ukraine following the seizure of Crimea. 
    "These geopolitical concerns do not directly have a big
impact on trade in Japan, but investors are taking a defensive
stance," a chief portfolio manager at a foreign asset management
firm. "They don't want to take large positions before the end of
the fiscal year. They want to see how the next month's sales tax
increase will affect the domestic economy as well."
    Tokyo's scheduled hike to the nation's sales tax to 8
percent from 5 percent on April 1 has sparked worries that an
expected chill in consumption could derail an ongoing economic
recovery.  
    In the United States, an industry survey showed U.S.
manufacturing activity slowed in March. 
    Bellwether exporters were mixed, with Toyota Motor Corp
 rising 0.1 percent, Toshiba Corp shedding 1.6
percent, while Sony Corp falling 0.8 percent.
    Some small-sized stocks had a better morning session. Yellow
Hat Ltd, which sells automotive products, soared 4.6
percent after the company raised its dividend payment forecast
for the year ending March to 22 yen per share from 18 yen per
share.
    Mandom Corp gained 1.6 percent after the Nikkei
reported that the cosmetics maker is expected to post an
all-time-high operating profit for the current year through
March, driven by increased sales of cosmetics in Southeast Asia
and a weaker yen.
    The broader Topix was flat at 1,163.32, while the
JPX-Nikkei Index 400, an index comprised of
companies with a high return on equity and robust corporate
governance, shed 0.1 percent to  10,516.64.

 (Editing by Shri Navaratnam)
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