April 12, 2013 / 2:55 AM / 5 years ago

Nikkei drops 0.8 pct, takes breather after rally to near 5-year high

* Goldman expects Nikkei to reach 16,000 in 12 months
    * Fast Retailing falls on weaker-than-expected forecast
    * Chiyoda Corp tumbles after Woodside shelves LNG project

    By Ayai Tomisawa
    TOKYO, April 12 (Reuters) - Japan's Nikkei share average was
down at the midday break as the market took a breather after a
recent run of gains to an almost five-year high, but the
benchmark was underpinned by optimism that bold government and
central bank policies would revitalise the economy.
    The Nikkei has gained nearly 9 percent since the Bank Of
Japan stunned markets a week ago with a plan to inject $1.4
trillion into the Japanese economy over two years to beat
deflation.
    "Unless there are strong catalysts to drive the market
higher such as the yen weakening further to 100 yen against the
dollar, profit-taking is natural given the steep rises," said
Yutaka Miura, a senior technical analyst at Mizuho Securities.
    The Nikkei was down 0.8 percent at 13,440.44 at the
midday break. It opened up 0.1 percent at 13,568.25, its highest
level since July 2008, before moving into negative territory.   
    The broader Topix shed 0.4 percent to 1,143.27.    
    The dollar last traded around 99.51 yen on Friday,
compared with the session high of 99.95 hit on Thursday, its
highest level since April 2009.
    Index heavyweight Fast Retailing dropped 0.6
percent after falling as much as 5.5 percent. The Uniqlo
operator on Thursday left its full-year operating profit
forecast unchanged at 147.5 billion yen ($1.5 billion), slightly
lower than analysts' expectations for 149.9 billion yen.
    Chiyoda Corp tumbled as much as 11.2 percent and
was the biggest percentage loser after Woodside Petroleum
 shelved plans for the $40 billion Browse liquefied
natural gas project in Western Australia, in which the Japanese
company was involved.
    Auto parts maker Takata Corp sank as much as 6.7
percent to 1,698 yen and hit a five-week low, extending
Thursday's 9 percent slide after four Japanese automakers said
they were recalling a total of 3.4 million vehicles because
airbags supplied by the company are at risk of catching fire or
injuring passengers. Nomura Securities cut its rating on Takata
to "neutral" from "buy".
    Financials, which have risen strongly on hopes for reflation
in Japan, fell on profit-taking. Nomura Holdings 
dropped 1.1 percent and Mitsubishi UFJ Financial Group 
shed 0.9 percent.
    
    LONG-TERM NIKKEI VIEW BULLISH
    
    Since November, the Nikkei has surged more than 50 percent
on expectations that aggressive monetary and fiscal expansionary
policies will jolt the economy from almost two decades of
stagnation.    
    Goldman Sachs said that the BOJ's commitment to beat
deflation should be positive for earnings growth and stock
prices.
    While the market may pause near term as investors digest
earnings, the Nikkei will likely gain further in the long term,
Goldman said in a report. It raised the Nikkei's 12-month target
to 16,000 from 15,000.
    Others also shared Goldman's optimism.
    "Investors are still looking for buying opportunities in the
Japanese market although the current share prices have already
factored in expectations for higher profits for this fiscal
year," said Naoki Fujiwara, a fund manager at Shinkin Asset
Management.
    He added that investors expect the yen to weaken further and
the U.S. economy to recover steadily, which will serve as
tailwinds to Japanese equities.

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