Nikkei bounces, geopolitical concerns restrain buyers

Mon Jun 16, 2014 11:07pm EDT

* Nikkei rises 0.5 pct, Topix up 0.5 pct
    * Geopolitical woes keep investors sidelined
    * Mitsui Fudosan up on strong investor demand for its share
offer
    * Shippers down after Baltic Index drops to 1-year low

    By Tomo Uetake
    TOKYO, June 17 (Reuters) - Japanese stocks rebounded from
steep falls on the previous day, but Tuesday's early session saw
most institutions holding back on growing concerns over
geopolitical risks in the Middle East and Ukraine.
    The benchmark Nikkei gained 0.5 percent to 15,008.42
by the midday break, though it has recovered only about half of
its 1.1 percent losses on Monday.
    One possible trigger for the rebound was that the Nikkei's
25-day moving average stepped above its 100-day average on
Monday, a positive technical signal that could prompt buying
from retail traders.
    Still, market players said overall market activity was
subdued and reflected the cautious mood in global markets amid
the Iraq crisis.
     "It's almost like the market is holding its breath," said
Stefan Worrall, director of equity cash sales at Credit Suisse
in Tokyo.
    "The underlying tone is constructive but investors are quite
happy to wait until greater direction from the U.S or there's
some resolution to conflicts," in Iraq and Ukraine, he said.
    U.S. stocks closed slightly higher on Monday, supported by a
flurry of merger news and positive economic data, but turmoil in
Iraq drove oil prices up and kept trading choppy.
 
    The insurgency in Iraq has pushed oil prices higher in
recent days, and investors are worried about the broader impact
of higher energy costs on global growth.
    Tension in Ukraine also showed no sign of abating as Russia
cut off gas to Ukraine on Monday in a dispute over unpaid bills
that could disrupt supplies to the rest of Europe and set back
hopes for peace between the former Soviet neighbours.
 
    Mitsui Fudosan Co Ltd jumped 2.9 percent and was
the second-most traded stock by turnover on the main board
following strong investor demand for its first share sale in
three decades to raise capital. 
    Itochu Corp climbed 2.8 percent after the Nikkei
newspaper said the trading company is targeting a return on
equity of 15 percent in the near future, aiming to attract
foreign investors.
    Bucking the overall market, shippers were by far
the worst performer, falling 1.9 percent after the Baltic Dry
Index fell to a one-year low. Nippon Yusen KK 
and Mitsui OSK Lines Ltd shed 2.3 percent and 2.1
percent, respectively.
    Meanwhile, traders said that investors are also awaiting for
the Federal Reserve's conclusion of a two-day policy meeting on
Wednesday, when the U.S. central bank is expected to announce it
will continue paring its bond purchase programme and cut its
growth projections.
    The broader Topix added 0.5 percent to 1,240.88,
while the JPX-Nikkei Index 400 advanced 0.5 percent
to 11,298.37 by the lunch break.

 (Editing by Shri Navaratnam)
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