Nikkei falls on World Bank's lower growth forecast; Mitsubishi Heavy rises

Wed Jun 11, 2014 9:42pm EDT

* Mitsubishi Heavy soars on proposed Alstom deal
    * Corporate tax cut details positive for market sentiment -
analyst

    By Ayai Tomisawa
    TOKYO, June 12 (Reuters) - Japan's Nikkei share average fell
to a 1 1/2-week low on Thursday morning after the World Bank's
downward revision of its global growth forecast soured
sentiment, while a stronger yen pulled down exporters.
    Bucking the weakness, Mitsubishi Heavy Industries 
surged 2.7 percent and was the sixth most traded stock by
turnover after the company said it and Siemens are in
talks over a joint bid for the energy assets of France's Alstom
. 
    The Nikkei dropped 1.2 percent to 14,893.30 in
mid-morning trade. Earlier, it fell as far as 14,862.08 earlier,
the lowest since June 2.
    The World Bank cut its global economic growth forecast for
2014 to 2.8 percent from 3.2 percent because of the harsh U.S.
winter and the impact of the Ukraine crisis. 
    "If U.S. demand is weak, Japanese manufacturers would get a
hit, so the World Bank's announcement is hurting the mood," said
Norihiro Fujito, senior investment strategist at Mitsubishi UFJ
Morgan Stanley Securities.
    But he also said that selling should be short-lived , as it
should be undercut by expectations for the Japanese government's
restructuring plans.
    Sources told Reuters on Thursday that Japan plans to lower
the corporate tax rate to below 30 percent within a few years
starting from the next fiscal year, as part of Prime Ministerr
Shinzo Abe's package of steps to boost Japan's growth potential.
 
    "The news itself is not surprising as the figure is in line
with market expectations, but Abe's attitude to give details on
what the stock market has been waiting for is positive," Fujito
said.
    Exporters lost ground as the dollar traded at 102.05 yen
, hovering near a one-week low of 101.86 yen set on
Wednesday.
    Toyota Motor Corp dropped 1.0 percent, Honda Motor
Co shed 0.9 percent and Panasonic Corp fell
1.1 percent.
    The broader Topix slid 0.8 percent to 1,229.31, and
the new JPX-Nikkei Index 400 declined 0.8 percent to
11,189.67. 

 (Editing by Richard Borsuk)
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