By Dominic Lau
TOKYO, Jan 9 Japan's Nikkei average slipped on
Wednesday, heading for a third straight session of losses, as a
rebounding yen prompted investors to take profits on exporters
after their recent stellar performance.
The Nikkei has rallied more than 20 percent over the past
two months, led by exporters as the yen weakened after new Prime
Minister Shinzo Abe called on the central bank to adopt
aggressive policy to energise the ailing economy, including
setting an inflation target of 2 percent.
The Bank of Japan will consider easing monetary policy again
this month as it eyes doubling its inflation target, sources
told Reuters, as weakness in the economy threatens to delay the
country in getting out of deflation.
Any easing will likely take the form of another increase in
the BOJ's 101 trillion yen ($1.2 trillion) asset buying and
lending programme, mostly for purchases of government bonds and
treasury discount bills, sources familiar with its thinking say.
Profit-taking in the dollar and the euro strengthened the
Japanese currency, which was quoted at 87.19 on Wednesday after
rising 0.9 percent in the previous session, its second straight
day of gains.
The Nikkei eased 0.5 percent to 10,458.78, breaking
below its five-day moving average at 10,529.88 and taking its
14-day relative strength index to 70.4, just above the 70-mark
which is considered overbought and often signals a near-term
"People are selling some of the high-beta names that they
have made some money in, and are moving into some of the
defensives," a senior dealer at a foreign brokerage in Tokyo
"There is some concerns that the yen could strengthen ...
probably people are banking on the European Central Bank meeting
resulting in some sort of bad news for the euro."
The ECB is expected to hold off on cutting interest rates at
its regular policy meeting on Thursday.
Major exporters succumbing profit-taking included Toyota
Motor Corp, Honda Motor Co, Canon Inc
and Daikin Industries, down between 0.7 and 2.1
However, Takashi Hiroki, chief strategist at Monex Inc, said
the sell-off was likely to be limited as investors may bet on a
stronger Wall Street performance on Wednesday after Alcoa Inc
, the largest aluminium producer in the United States,
reported an in-line fourth quarter profit after the market
close. Alcoa shares rose in after-hours trading.
The recent rally has also pushed up valuations of Japanese
equities, which carry a 12-month forward price-to-earnings ratio
of 13 versus 12.7 for the U.S. S&P 500 and 11.5 for the
pan-European STOXX Europe 600, according to Thomson
Japan's broader Topix dropped 0.6 percent to 866.78
in midmorning trade on Wednesday.
Financials also came under pressure after recent gains, with
Mitsubishi UFJ Financial Group off 2 percent and
Mizubho Financial Group down 1.2 percent.
But Seven & I Holdings Co advanced 1.4 percent
after its quarterly operating profit rose 4.8 percent as higher
profits from its core 7-Eleven stores were supported by stronger
income figures at other retail formats.