January 7, 2014 / 1:50 AM / 4 years ago

Nikkei sags for 2nd day hit by weak U.S. data

* Eyes on Friday's U.S. jobs data, Fed clues - analyst
    * Large caps mixed, exporters lower
    * Fast Retailing drops on weaker-than-expected Dec sales
    * Mori Seiki soars on CLSA's upgrade

    By Ayai Tomisawa
    TOKYO, Jan 7 (Reuters) - Japan's Nikkei share average
dropped on Tuesday morning after economic data showing a
slowdown in growth in the U.S. services sector made investors
wary of taking on risk.
    The Nikkei fell 0.6 percent to 15,807.86 in choppy
mid-morning trade. After opening lower, it briefly flirted with
positive territory. On Monday, the index ended 2.4 percent
    Data from the Institute for Supply Management showed the
pace of growth in the U.S. services sector slowed for a second
straight month in December with business activity expanding at a
lower rate and new orders contracting. 
    Analysts said investors' eyes will be on Friday's U.S.
nonfarm payrolls data, which will give further clues as to how
fast the Federal Reserve will unwind its stimulus programme.
    "When the market is sensitive about how well the U.S.
economy is doing, each economic data can create volatility in
the market," said Hikaru Sato, a senior technical analyst at
Daiwa Securities. "Until Friday, it will be difficult to draw
new money into the market, but the weak ISM data is not going to
be the reason to sell aggressively."     
    The Topix dropped 0.1 percent to 1,291.39.
    Large cap stocks, which tumbled on Monday on profit-taking,
were mixed. Fast Retailing Co dropped 0.7 percent and
was the most traded stock by turnover after its same-store sales
at its Uniqlo clothing chain in December disappointed the
    The same-store sales in December rose 1.1 percent from a
year earlier as the colder weather pushed up sales of winter
clothing, but it was worse than what the market expected,
traders said. 
    For other large cap stocks, Fanuc Corp slid 0.8
percent, while KDDI Corp rose 1.8 percent.
    Exporters were weaker as the dollar traded at 104.18 yen
, having fallen as far as 103.91, a low not seen since
Dec. 23. It continued to pull back from a five-year peak of
105.45 set last week.
    Honda Motor Co and Tokyo Electron Ltd both
fell 0.7 percent.
    DMG Mori Seiki Co bucked the weakness, rising as
much as 4.4 percent to a 5-1/2-year high after CLSA hiked its
rating to 'high-conviction buy' from 'outperform', citing a
recovery in machine-tool demand and a possibility that it will
raise its earnings forecast.
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