January 5, 2012 / 3:05 AM / 6 years ago

Nikkei retreats from 3-wk high as euro worries nag

* Nikkei down 0.5 pct but stays above 25-day moving average
    * Steelmakers drop after report Toyota seeks price cut
    * Nomura bullish on Japan stocks in H1, eyes Nikkei above

    By Dominic Lau and Mari Saito	
    TOKYO, Jan 5 (Reuters) - Japan's Nikkei stock average
pulled back on Thursday from a three-week closing high, weighed
down by concerns that the euro zone debt crisis would keep the
single currency weak against the yen and hurt Japanese
    "The strong yen against the euro is not seen as a temporary,
short-term problem and it is pressuring the market," said Yutaka
Miura, a senior technical analyst at Mizuho Securities.	
    "The focus this year is whether Europe's debt problems will
settle and when those problems will begin to impact the United
States. There are no other themes this year except Europe.
Market participants are watching how much longer the yen will
continue to rise against the euro and the dollar."	
    The euro was trading just above 99 yen on
Thursday, near an 11-year low.	
    Miura said that investors did not want to buy near the top
after Wednesday's gains and that resistance on the Nikkei was
seen just above its 25-day moving average at 8,600.	
    Steelmakers came under pressure after a report in the Nikkei
business daily that Toyota Motor Corp is seeking a
price reduction of about 5,000 yen ($65.16) per tonne from
Nippon Steel and its peers. 	
    Nippon Steel also announced after the morning session that
it plans to book an 84.6 billion yen appraisal loss on its
shareholdings for the October-December period. 	
    Nippon Steel fell 1.5 percent by the midday break and JFE
Holdings shed 1.7 percent.	
    Other actively traded stocks included struggling chipmaker
Elpida Memory, which dropped 6.4 percent after a report
that it has sought $500 million in financial aid from clients
and is considering asking for help from Toshiba Corp.
Elpida declined to comment.	
    The Nikkei was down 0.5 percent at 8,514.03 at
midday, holding just above its 25-day moving average
of 8,504 after gaining 1.2 percent on Wednesday. The broader
Topix slipped 0.5 percent to 739.24.	
    Volume on the Topix was 36 percent of its 90-day daily
    Hiroyuki Fukunaga, CEO of Investrust, said U.S. employment
data this week would be a crucial near-term factor.	
    "The key point here will be whether the positive economic
data will lead to market confidence over the U.S. economic
recovery and whether there is any impact on the dollar," he
    However, Nomura expected Japanese equities to rebound in the
first half of 2012, with the Nikkei going above 10,000, more
than 17 percent above its current level.	
    "In 2012 H1, we expect good news in the form of an easing of
financial concerns in Europe and greater-than-expected strength
of the global economy and emerging economies in particular, and
we thus expect the Japanese stock market to be driven by trading
companies, machinery, electronics/precision and financials,"
Nomura wrote in a note.	
    Although the Topix 500 carries a similar 12-month
forward price-to-earnings valuation of 11.7 to the U.S. S&P 500
, nearly 60 percent of the Japanese companies are trading
below their net asset value, data from Thomson Reuters
Datastream showed.	
    That compares with 15 percent of the S&P 500 firms carrying
a one-year forward price-to-book ratio of below 1.

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