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Nikkei sags on underwhelming U.S. jobs data
July 9, 2012 / 1:46 AM / 5 years ago

Nikkei sags on underwhelming U.S. jobs data

* Fast Retailing falls 1.6 pct, changes profit forecast
    * Komatsu, Sumitomo Heavy Industries hurt by weak demand
    * Midsized shippers buck the trend

    By Sophie Knight
    TOKYO, July 9 (Reuters) - Japan's Nikkei share average broke
the psychologically important 9,000 level in early trade on
Monday after poor U.S. jobs data reinforced concerns about
flagging global growth, while domestic industrial machinery
makers suffered losses on falling orders.
    The Nikkei dropped 1 percent to 8,933.67 while the broader
Topix index fell 0.8 percent to 765.49. 
    Mid-sized shippers and telecommunication companies bucked
the trend, but heavyweight Fast Retailing Co dragged on
the index, falling 2.2 percent after a drop in sales at its
Uniqlo casual-clothing chain in Japan provoked it to lower its
full-year forecast below market estimates on Friday.
 
    "The jobs data showed the U.S. economy isn't terrible but
it's also not good," said Fumiyuki Nakanishi, general manager of
investment and research at SMBC Friend Securities. "If European
leaders fail to come to some kind of agreement tonight then the
sell-off will likely continue."
    Euro zone finance ministers are due to meet in Brussels
later in the day to discuss a bailout of Spanish banks and the
ongoing debt crisis in the region. 
    Komatsu Ltd dropped 3.3 percent after Nomura
Securities downgraded it to "neutral" from "buy" and cut its
target price to 2,100 yen from 2,600 yen to reflect the
likelihood of slowing demand for construction machinery in
China.
    The downgrade comes after core machinery orders in Japan
slumped 14.8 percent in May, exceeding the median forecast of a
3.3 percent decrease in a Reuters poll. Sumitomo
Heavy Industries also shed 3.6 percent. 
    Mid-sized shipping companies steamed against the tide,
however, with Meiji Shipping Co Ltd surging 8 percent
and Kyoei Tanker Co Ltd and Inui Steamship 
both up 2.3 percent.
    The Nikkei dropped below 9,003.63, the 38.2 percent
retracement of its fall between its March high of 10,255 and
June low of 8,295.
     Analysts are concerned that the Nikkei's failure to breach
the 50 percent retracement level last week indicate its
one-month rally has run out of energy.
    "Many people have been eyeing 9,000 as their exercise price
for the options SQ at the end of the week, but now it looks like
it could go down to 8,700," Nakanishi said. 
    An options special quotation or SQ indicates the expiration
of several stock options, which usually spikes volumes.

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