* Kuroda's signal on bold easing limits decline
* Asian investors more confident on Japan - BNP Paribas
* Softbank rises after announcing Gungho tender offer
By Ayai Tomisawa
TOKYO, March 26 Japan's Nikkei average weakened
on Tuesday after a senior euro zone official said the Cyprus
rescue could be a template to deal with other banking problems
in the region, though the fall was capped by hopes for Japan's
bold monetary easing.
The Nikkei dropped 0.2 percent to 12,516.92 at the
midday break after falling as much as 0.7 percent earlier.
While the market opened weak, stocks came off lows after
Bank of Japan Governor Haruhiko Kuroda signalled bold monetary
He said that the central bank will seek to push down yields
across the curve by purchasing longer-dated government bonds,
underscoring the BOJ's resolve to expand its balance sheet more
aggressively to beat deflation.
Investors are growing increasingly confident about Japan
stocks "backed by hopes for the BOJ's aggressive easing and
public spending," said Kyoya Okazawa, Tokyo-based head of global
equities at BNP Paribas.
Okazawa, who visited investors in Hong Kong recently, said
investors show rising interest in Japanese equities, and are
less optimistic about other markets, which face risks including
"Still, long-only investors are underweight on Japan, but
the Japanese market will likely stay strong until the upper
house election in the summer. After that, investors will likely
seriously question how (Prime Minister) Abe is going to boost
the country's growth through his growth strategy," Okazawa said.
A senior dealer at a foreign bank in Tokyo said of Tuesday
trading "We have seen some pretty good flows. We do have a bit
of profit-taking in some blue chips. I guess we are 50-50 (in
buy and sell orders)."
However, he said some selling was coming from long-only
Exporters with high exposure to Europe were sold on
profit-taking. Nikon Corp fell 1.7 percent, Mazda Motor
Co dropped 3.8 percent and Sony Corp shed 2.7
percent on worries over European debt issues.
The Cyprus bailout deal is forcing large uninsured
depositors and bondholders to bear heavy losses, and Dutch
Finance Minister Jeroen Dijsselbloem, who heads the Eurogroup of
euro zone finance ministers, said the Cyprus bailout represented
a new model for resolving banking crises in the currency bloc.
On Tuesday, gains in index heavyweight Softbank Corp
helped limit market declines after its mobile unit said
it will launch a tender offer to make game developer Gungho
Online Entertainment Inc a consolidated subsidiary.
Softbank climbed 2.5 percent and was the most traded stock
on the main board by turnover. Gungho sank 5.8 percent.
The broader Topix index dropped 0.1 percent to
1,045.90 with 1.48 billion shares changing hands. Volume was on
track to be close to last week's average 3.06 billion shares.
JAPANESE STOCKS SEEN EXPENSIVE
The benchmark Nikkei has rallied 45 percent since
mid-November, when Shinzo Abe unveiled proposals, during his
election bid, for expansionary fiscal and monetary policies to
revive the economy.
"At the end of May 2012, over 20 percent of Japanese stocks
qualified as Deep Value. That number has since dropped to just 5
percent, making Japan the second-most expensive region on this
basis behind the U.S.," Societe Generale wrote in a note.
"Japan is now going to have to demonstrate improving
fundamentals to warrant further upside," it added
Japanese equities carry a 12-month forward price-to-earnings
ratio of 14.1, a level not seen since August 2010 and compared
with U.S. S&P 500's 13.6, data from Thomson Reuters