January 30, 2014 / 2:15 AM / in 4 years

Nikkei tumbles to 2 1/2-month low after Fed's decision

* Fed's silence on emerging markets disappoints - analyst
    * Nintendo sheds early gains as strategy disappoints market
    * Stem cell-related stocks soar on research news

    By Ayai Tomisawa
    TOKYO, Jan 30 (Reuters) - Japan's Nikkei share average
tumbled more than 3 percent on Thursday morning after the U.S.
Federal Reserve scaled back stimulus amid emerging market
turmoil, while a rise in the yen soured overall sentiment.
    The Nikkei dropped 3.3 percent to 14,873.03 in
mid-morning trade after falling to as far as 14,853.83, the
lowest since Nov. 14. The index's support is seen at 14,731.17,
a 61.8 retracement from an October low to a December high.
    A spike in the yen soured market sentiment after the Fed, in
a widely expected move, cut its bond purchases by another $10
billion to $65 billion a month. The decision sent investors
scurrying to the safety of bonds and yen. 
    Analysts said that the market had priced in the Fed's
decision to trim its stimulus by another $10 billion, but was
disappointed that it didn't address concerns about turmoil in
emerging markets.
    "The market was expecting some thoughtful comments about
what's happening in emerging market assets as that's something
most investors are concerned about now," said Kenji Shiomura, a
senior analyst at Daiwa Securities.
    The Topix dropped 2.9 percent to 1,219.98.
    Sentiment remained fragile with many emerging market
currencies under pressure again overnight.
    The South African rand fell more than 2 percent to
the dollar even after the country's central bank raised rates
for the first time in almost six years.
    The dollar last traded at 102.15 yen, having fallen
from Wednesday's peak of 103.45, hitting exporters as the strong
yen hurts their competitiveness as well as their overseas
earnings when repatriated.
    Toyota Motor Corp shed 2.1 percent and Sony Corp
 dropped 2.7 percent.
    Nintendo Co initially rose more than 7 percent
morning on a share buy-back plan but the gain was erased by
mid-morning after the company's decision to stick with its
hardware platform strategy disappointed investors. Shares of
Nintendo - the third-most traded stock - were down 3.7 percent.
    Bucking the weakness, stem-cell related stocks jumped, with
Takara Bio Inc soaring as much as 10 percent and Trans
Genic Inc as much as 16 percent on news scientists have
found a simple way to reprogramme mature animal cells back into
an embryonic-like state that allows them to generate many types
of tissue. 
    The real estate sector took a hit after Mizuho Securities
cut ratings of Sumitomo Realty & Development,
Mitsubishi Estate Co and Nomura Real Estate Holdings
 to 'neutral' from 'buy', which fell between 3.2 percent
and 4.7 percent.
    The JPX-Nikkei Index 400, a recently introduced
gauge comprised of firms with high return on equity and strong
corporate governance, dropped 2.8 percent to 11,032.44.

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