June 12, 2013 / 3:06 AM / 5 years ago

Nikkei dips below 13,000 as exporters, real estate stocks weigh

* Exporters sink on rising yen
    * Interest rate worries weigh on property, bank

    By Ayai Tomisawa
    TOKYO, June 12 (Reuters) - Japan's Nikkei share average
slipped below 13,000 on Wednesday, as the strong yen dragged
down exporters in the wake of a sell-off in global equities
after disappointment over a lack of fresh measures from the Bank
of Japan to quell bond market volatility.
    The Nikkei fell 1.8 percent to 13,072.61 at the
midday break after falling as low as 12,994.08.
    On Tuesday, U.S. stocks and European shares tumbled, while
the dollar sank against the yen on the back of the BOJ's
decision to skip fresh steps to calm turbulence in the
government bond market. 
    "Although investors were already frustrated after
yesterday's BOJ outcome, the bad mood was exacerbated by the
negative reaction overseas," said Yutaka Miura, a senior
technical analyst at Mizuho Securities.
    But after the index dipped below the 13,000 mark,
short-covering kicked in, lifting the index above the line.
    "A level above 13,000 is appropriate given expectations that
companies will report strong earnings from the second half of
the fiscal year," said Kenji Shiomura, an analyst at Daiwa
Securities. "When the dollar fell below 96 yen, it startled the
market, but as long as it is above that level against the yen,
anything below 13,000 is cheap."
    Most Japanese exporters have set their foreign exchange
assumptions between 90 yen-95 yen to the dollar for the year
ending March, raising the prospect of strong earnings compared
to the previous year as the weaker yen lifts their
competitiveness overseas as well as their profits when
    Exporters weighed on the index, with Toyota Motor Corp
 dropping 3.2 percent, Honda Motor Co falling
2.9 percent and Toshiba Corp shedding 2.8 percent,
after the yen rose to 95.60 yen against the dollar on Tuesday.
It was a gain of more than three percent, marking its biggest
one-day percentage move since March 16, 2011. The yen last
traded at 96.53 yen against the dollar.
    The Topix dropped 2.1 percent to 1,078.24.
    Reflationary stocks such as banks and real estate stocks
underperformed on worries about a potential rise in mortgage
interest rates if the long-term interest rate rises steeply in
volatile trade again.
    "Until volatility completely calms, investors will stay on
the sidelines," said Hajime Nakajima, deputy general manager at
Cosmo Securities, adding that investors who expected the central
bank to announce measures to calm volatility in the bond market
were selling on disappointment.
    Mitsubishi UFJ Financial Group fell 3.6 percent,
Sumitomo Mitsui Financial Group dropped 3.2 percent and
Mitsui Fudosan Co tumbled 4.5 percent.         
    The Japanese market has been under heavy selling pressure
over the past few weeks, hit by slowing growth in China and
worries the U.S. Federal Reserve would scale back its stimulus
this year. Disappointment over lack of details in the Japanese
government's growth strategy unveiled last week had also weighed
on stocks.
    Relentless weakness in the yen and high expectations over
Prime Minister Shinzo Abe's sweeping policies to revive the
world's third-biggest economy underpinned the Nikkei's
60-percent-plus rally this year to a 5-1/2-year high on May 23. 
    The Nikkei has fallen nearly 18 percent since hitting the
multi-year peak in May, but is up 5.7 percent since the BOJ's
radical monetary expansion campaign was announced on April 4 and
has risen 26 percent so far this year.

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