May 15, 2012 / 7:35 AM / 7 years ago

Nikkei closes at 3-1/2 month low on Greece fears

* Nikkei down 0.8 pct, Topix hits 4-month closing low
    * Exporters drops on Greece's inability to form government
    * Sony, Panasonic reverse early gains on reported OLED talks
    * Mixi soars, CEO reportedly mulls selling his stake

    By Dominic Lau	
    TOKYO, May 15 (Reuters) - Japan's Nikkei share average fell
to a 3-1/2 month closing low on Tuesday, weighed down by
exporters with exposure to Europe after Greece struggled to form
a coalition government, increasing fears that it may have to
leave the euro zone.	
    The Nikkei closed down 0.8 percent at 8,900.74,
although it pulled back from the lowest intraday level since the
beginning of February in the afternoon session, with traders
suspecting the Bank of Japan of purchasing exchange-traded funds
to support the market.	
    Tuesday's fall took the benchmark below technical support
near 8,945, the 61.8 percent retracement of its rally from
November to March.	
    The Nikkei has lost 13.2 percent since hitting a one-year
peak of 10,255.15 on March 27 on concern over slowing global
growth and the intensifying euro zone sovereign debt crisis. It
is now deep in "oversold" territory, with the 14-day relative
strength index at 27.3.	
    "Retail investors are getting washed out ... A lot of
retails are getting margin calls," a dealer at a European bank
said.	
    He and another trader said bearish bets on the Nikkei had
increased, with some investors buying put options expiring in
June at the levels of 8,250, 8,500 
and 8,750.	
    Mazda Motor Corp, which has the highest exposure to
Europe among Japanese automakers, dropped as much as 9.1
percent, before ending down 2.7 percent.	
    Honda Motor Co Ltd, Toyota Motor Corp and
Nissan Motor Co Ltd lost between 2 and 2.8 percent.	
    Industrial robot maker Fanuc Corp, and camera and
printer maker Canon Inc both eased 1.5 percent.	
    "The markets are in risk-off mode because everyone is
thinking, if Greece leaves the euro, who's next?" said Norihiro
Fujito, senior investment strategist at Mitsubishi UFJ Morgan
Stanley. "Portugal and Spain's credit-default swap spreads are
sky-high; the domino effect has already begun."	
    The yen hovered near a three-month high against the euro
, which was traded at 102.66 yen, pressuring Japanese
exporters.	
    The broader Topix index dropped 1.2 percent to
747.40.	
    Trading volume on the main board hit its highest since April
27, with 2.06 billion shares changing hands. 	
    "A resolution (in Greece) and the formation of a cabinet
would make Japanese markets bounce right back up, but for the
moment everything's being sold off, bar defensives and companies
who've given good guidance," said Fumiyuki Nakanishi, general
manager of investment and research at SMBC Friend Securities.	
    	
    TAIYO YUDEN JUMPS	
    Taiyo Yuden Co Ltd, an electronic parts maker,
forecast a return to profit this financial year, beating market
estimates with its projection for 10 billion yen in operating
profit. The stock surged 9 percent.	
    Goldman Sachs also recommended investors focus on companies
with high earnings visibility and strong balance sheet.	
    "Until there is greater macro certainty, we retain our
neutral market stance near-term. We believe stocks with better
earnings visibility and relatively healthy balance sheets may
continue outperforming in the short-run," it said in a note.	
    Sony Corp and Panasonic Corp rose more
than 2 percent early on Tuesday after sources said the companies
were in talks to jointly make next-generation OLED televisions,
but reversed direction midmorning. 	
    Sony finished down 2.3 percent and Panasonic fell 3.1
percent, both hitting fresh 32-year closing lows.	
    Social networking service operator Mixi Inc 
advanced 10.4 percent after the Nikkei Business weekly reported
that its president was considering selling his 55 percent stake
in the company.	
    The magazine said potential bidders included social gaming
companies Gree Inc, down 3.4 percent, and DeNA Co Ltd
, off 3.5 percent.
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