Nikkei edges down before Fed; resource shares up

By Elaine Lies

TOKYO (Reuters) - Japan's Nikkei stock average edged down 0.1 percent on Wednesday in thin trade on wariness before the results of a Federal Reserve meeting, but energy shares such as Inpex (1605.T) rose after crude oil surged the previous day.

Showa Shell Sekiyu (5002.T) climbed over 7 percent on its plans to work with Saudi Aramco Oil Co on a feasibility study on solar power business in Saudi Arabia.

But market players said the Nikkei was treading water after falling 2.8 percent the day before, with scattered bargain-hunting unlikely to lift the average much in the face of bearish technical signals and uncertainty ahead of the end of the Fed meeting later on Wednesday.

"To say that investors globally are getting out of riskier assets is probably an exaggeration, but there's no question that people are taking profits and interest in riskier assets is receding a bit," said Koichi Ogawa, chief fund manager at Daiwa SB Investments.

"After the new quarter starts in July, people may be more eager to take on those riskier assets again, but the situation is very hard to read."

Investors are keenly awaiting the Fed's policy decision statement and are nervous about anything that could hint at interest rate hikes. "The ideal result is for no change in policy and for the Fed to merely say that they might think about interest rates again later in the year, after the economy improves," said Tomomi Yamashita, a fund manager at Shinkin Asset Management.

The benchmark Nikkei .N225 lost 5.52 points to 9,544.09, while the broader Topix lost 0.2 percent to 899.63.

WILL SUPPORT HOLD?

While market analysts said they still expected support for the Nikkei to hold at 9,500, bearish signals are showing up on technical charts.

The Nikkei earlier this week fell below its 25-day moving average. In addition, the 5-day moving average is nearly at the 25-day moving average and could cross below it soon, a move known as the "Death Cross" and which is often a bearish signal.

A similar pattern appeared in late April, where an apparently imminent Death Cross was avoided at the last moment and instead signaled the bottom of a brief dip.

A break below 9,500 could set off a drop to 9,000, where the 200-day moving average currently comes in.

"Falling down this far would signal quite an adjustment, and recovery could take some time," Ogawa added.

In a sign that profit-taking was gathering pace, shares such as GS Yuasa (6674.T) which had surged last week, extended losses sharply. Lithium-ion battery maker GS Yuasa lost 5.6 percent to 916 yen and Meidensha Corp (6508.T), known for environmental products such as water-treatment control systems, dropped 5.1 percent to 581 yen.

Seven & I Holdings (3382.T) fell 2.6 percent to 2,220 yen, extending losses made on Tuesday after Japan's Fair Trade Commission ordered its convenience store unit Seven-Eleven Japan to stop pressuring franchise outlets not to cut the price of food items nearing expiry dates.