February 14, 2018 / 7:11 AM / in 6 days

Nikkei hits 4-month low as investors wary of U.S. inflation data

* Nikkei falls below 200-day moving average during the day

* Market concerned strong yen may erode corporate earnings next FY - analyst

By Ayai Tomisawa and Hideyuki Sano

TOKYO, Feb 14 (Reuters) - Japan’s Nikkei share average dropped to a fresh four-month low in choppy trade on Wednesday as investor sentiment was sapped by worries about U.S. inflation data due later in the day.

The Nikkei ended 0.4 percent lower to 21,154.17, the lowest closing level since Oct. 12. In a sign of investor unease, the index moved in and out of the red during the day, and briefly dipped below its 200-day moving average of 21,030.86.

And clean break of that level could worsen sentiment, a real possibility if U.S. January inflation data triggers another rout in global shares.

“People are worried about U.S. long-term yields. Unless U.S. yields show some stability, the Japanese market could stay volatile as the strong yen hits sentiment,” said Nobuhiko Kuramochi, a strategist at Mizuho Securities. “Investors are also worried that Japanese corporate earnings in the next fiscal year would be eroded by the stronger yen.”

Mizuho Securities expects the dollar to trade at 110 yen on average for the next fiscal year through March 2019, and if the dollar weakens by 1 yen, it erodes Japan Inc’s pretax profits by 0.5 percent, Kuramochi said.

At 0642 GMT, the dollar was at 107.72 yen after plumbing 106.840, its weakest since November 2016.

Selling was broad-based, with about 80 percent of about 2,000 shares listed on the Tokyo Stock Exchange’s main board in the red while only about 20 percent made gains.

Exporters such as automakers and electronics products makers lost ground. Toyota Motor Corp dropped 2.1 percent, Mazda Motor Corp shed 1.8 percent, and Panasonic Corp declined 2.0 percent.

Non-ferrous metal stocks underperformed, with Mitsubishi Materials diving 8.8 percent and Mitsui Mining and Smelting stumbling 4.7 percent.

The broader Topix dropped 0.8 percent to 1,702.72, also sliding to its lowest level since October. (Reporting by Hideyuki Sano and Ayai Tomisawa Editing by Shri Navaratnam)

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