February 15, 2013 / 1:51 AM / in 5 years

Nikkei drops, investors cautious about potential yen criticism at G20

* Banks and carmakers sold off on uncertainty about yen
    * Rakuten and Yamaha fall on weak earnings
    * Financials move further away from recent highs
    * Nikkei on track for small weekly gain

    By Sophie Knight
    TOKYO, Feb 15 (Reuters) - Japan's Nikkei share average
dropped in early trade on Friday as investors pared their
exposure to exporters and banks as investors cautiously await
the outcome of the weekend G20 meeting.
    Finance officials from the G20 gather in Moscow, where they
are expected to discuss Japan's economic policies, which have
contributed to the yen's sharp decline against the dollar since
   "You need to be brave to buy today as there is great
uncertainty about what is going to come out at the G20," said
Shigeo Mito, manager of equity investment at Sumitomo Mitsui
    "It will be difficult to weaken the yen further if Japan's
economic policies are described as currency manipulation by
foreign officials," he added.
    The Nikkei fell 1 percent to 11,198.11 in morning
trade, but remained on track to eke out a weekly gain, after
last week's loss snapped a run of 12 straight weekly gains - the
longest such winning streak since 1959. 
    Financials that gained from the rally were in the firing
line, with Mizuho Financial Group Inc shedding 4.3
percent as the top-traded share by turnover on the main board,
pulling further away from a four-year high hit on Tuesday.
    Automakers, which have seen their share prices jump on
expectations of higher overseas revenues due to weakness in the
yen, were also sold off as some investors considered if the
one-way bet on the yen against the dollar and euro was losing
    Mazda Motor Corp, Toyota Motor Corp and
Honda Motor Co Ltd dropped between 2.7 and 4.8 percent.
    BOJ Governor Masaaki Shirakawa on Thursday defended the
central bank's aggressive monetary expansion, saying it was
aimed at reviving the economy, not at weakening the yen, but
investors remain wary. 
    The yen swung sharply up against the euro after data showed
the euro zone had fallen deeper into recession in the last three
months of 2012, painting a bleak picture of the region's 
economy. The contraction marked the region's first ever year
without a single quarter of growth, extending back to 1995. 
    "It's possible that the weakness of the euro zone's economy
is down to the strengthening of the euro," said Masayuki
Doshida, senior analyst at Rakuten Securities. 
    "Still, the only thing that might support the market today
is buying stocks on the dip, but the general mood is one of
wait-and-see before the G20." 
    Lower volume was expected on the Topix index, which
underperformed the Nikkei, dropping 1.5 percent to 940.61 by
    Elsewhere, Yamaha Motor Co Ltd fell 7.5 percent to
a three week low after its operating profit forecast for the
year ending Dec. 31 fell short of consensus estimates due to
slowing motorcycle sales in emerging countries. 
    Online shopping site operator Rakuten Inc dropped
4.4 percent after posting an operating profit of 2.1 percent to
72.26 billion yen ($776 million) for the year ended December 31,
undershooting analysts' expectations of around 80 billion yen.
   Matsumoto Kiyoshi bucked the market, rising 3.6
percent to hit a 3-year high after the domestic pharmacy
operator announced a commemorative dividend of ten yen per share
on Thursday to celebrate the company's 80-year anniversary.
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