Nikkei drops on U.S. tech blues, waning BOJ easing hopes

Mon Apr 7, 2014 9:41pm EDT

* Nikkei falls to 1 1/2-week low ahead of BOJ policy
announcement
    * Fall in U.S. internet shares hit SoftBank, other tech
shares
    * Brokerages, financial firms underperform as market sees no
BOJ stimulus
    * Exporters another loser as yen rebounds, Honda down 2.7
pct

    By Hideyuki Sano
    TOKYO, April 8 (Reuters) - Japanese shares dropped on
Tuesday after a sudden tumble in U.S. tech stocks turned
investors against risk, and as the Bank of Japan is expected to
offer no new stimulus at its policy announcement later in the
day.
    The Nikkei share average fell 1.2 percent to 14,638.09
, its lowest levels in a week and a half, underperforming
its U.S. and regional peers.
    "The impact of a fall in U.S. shares was unavoidable. Many
participants are on the sidelines, which makes markets more
susceptible to one-direction moves. The market will have to wait
for earnings to rebuild," said a trader at a Japanese brokerage
firm.
    U.S. shares fell in the past few sessions, led by tech
stocks, as investors bid down expensive internet companies and
rotated into defensive names.
    That hit Japanese tech stocks, with SoftBank seen
as particularly vulnerable ahead of the IPO by Alibaba. The
Japanese internet firm has around a 37 percent stake in the
China-based e-commerce giant.
    Softbank fell 3 percent to five-week lows while Yahoo Japan
, 42.6 percent owned by SoftBank, fell 3.9 percent to
five-month lows.
    Investors expect the BOJ to hold off providing any
additional economic support as it concludes its two-day policy
meeting on Tuesday.
    The sectors that are considered to benefit the most from the
BOJ's money printing, such as securities brokers and financial
companies fell sharply, reversing some of their gains from late
last week.
    Brokerage shares fell 2.7 percent while other
financial companies dropped 2.5 percent.
    Still, many market players expect the BOJ to take some steps
later this year, believing the Japanese economy could falter
after a last week's sales tax hike, and inflation could fall
short of the 2 percent BOJ's target.
    "We expect net trade to remain sluggish, as imports are more
expensive and slower Chinese demand weighs on exports. Household
consumption should also suffer from the tax hike. So growth
could slow down and if it slows too much, the BOJ is very likely
to intervene to compensate for that," said Stephanie de Torquat,
strategist at Lombard Odier, a Swiss private bank based in
Geneva.
    Exporters' shares also underperformed after the yen gained
in the past few sessions to fetch 102.86 yen to the dollar
, stepping back from three-month low of 104.13 hit late
last week.
    Honda Motor fell 2.8 percent while Bridgestone
 dropped 2.7 percent, in relatively heavy trade volume.
    The overall trading volume is low, however, just slightly
above its levels at the same time the previous day, which saw
one of the lowest trading volumes so far this year.
    The broader Topix index dropped 1.6 percent to
1,177.29 while the new JPX-Nikkei Index 400 fell 1.5
percent to 10,698.48.

 (Editing by Eric Meijer)
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