August 13, 2014 / 2:45 AM / 4 years ago

Nikkei choppy on gloomy Japan GDP, geopolitical tensions

* Japan GDP shrinks sharply in Q2, adds to cautious backdrop
    * Geopolitical tensions continue to cap risk-appetite -

    By Ayai Tomisawa
    TOKYO, Aug 13 (Reuters) - Tokyo stocks were choppy on
Wednesday morning as geopolitical tensions checked
risk-appetite, and investors were reluctant to chase the market
higher after data showed Japan's economy suffered its biggest
contraction in three years.
    An overnight report that showed a slump in German economic
sentiment and a retreat on Wall Street added to the cautious
    The Nikkei ended the morning session up 0.2 percent
at 15,186.10 after remaining flat most of the time.
    Japan's economy shrank an annualised 6.8 percent in the
second quarter, the biggest contraction since the devastating
March 2011 earthquake, as consumption slumped after an increase
in the sales tax, Cabinet Office data showed on Wednesday.
    While the figure was slightly better than market forecast of
a 7.1 percent drop, the Bank of Japan could face pressure for
further monetary easing if weakness in exports and consumption
is prolonged.
    "This was pretty much as we'd expected: bad. There's
basically minuses in everything - private consumption down 5
percent, housing with a double-digit drop, and capex is also
down," said Yuichi Kodama, economist at Meiji Yasuda Life
    Toru Ibayashi, executive director at UBS Wealth Management,
said speculation of additional monetary easing could grow in
coming months if markets doubt that the BOJ won't be able to
achieve the 2 percent inflation target.
    "When it becomes clear, the stock market will likely start
expecting easing, so such a possibility can serve as a support
to the market mid-to-long term."
    Exporters were stronger, with Toyota Motor Corp 
rising 0.2 percent and Nikon Corp gaining 1.8 percent.
    Sony Corp jumped 2.6 percent after it said that
sales of its PlayStation 4 video game console, launched in
November, has surpassed 10 million units. 
    Bucking the trend, Ulvac Inc tumbled 24 percent
after the solar power equipment maker said its full-year net
profit for the year ended in June will fall 43.4 percent on year
to 6.5 billion yen.
    In the near term, the market is expected to be influenced by
the conflicts in Ukraine, Iraq and Gaza, analysts said.
    "We have a lot to worry about, whether it's the crisis in
Ukraine, developments in Gaza or the outbreak of Ebola," said
Makoto Kikuchi, the chief executive of Myojo Asset Management.
    The broader Topix was flat at 1,257.93, and the new
JPX-Nikkei Index 400 was also flat at 11,450.42.
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