March 28, 2013 / 3:15 AM / 5 years ago

Nikkei falls as exporters and financials weigh, GS Yuasa tumbles

* Euro-sensitive exporters underperform
    * GS Yuasa tumbles on Mitsubishi Motors' battery overheating

    By Ayai Tomisawa
    TOKYO, March 28 (Reuters) - Japan's Nikkei share average
dropped on Thursday with exporters and financials falling on
profit-taking as sentiment was hit by weakness in the euro due
to concerns about Italy's funding costs and the rescue deal for
    The Nikkei dropped 1.6 percent to 12,298.61 by the
midday break, staying below its five-day moving average of
12,429.80 and moving away from a 4-1/2-year high of 12,650.26
struck last Thursday.
    Exporters with high exposure to the euro zone such as Mazda
Motor Co and Sony Corp underperformed, falling
2.8 percent and 3.8 percent, respectively, after political
uncertainty in Italy drove its borrowing costs to five-month
    Among financials, Mitsubishi UFJ Financial Group 
dropped 2.7 percent and Mizuho Financial Group shed 3.4
    The euro last traded at 120.27 yen after dipping
to a one-month low around 119.95 yen.
    "We have major events to look forward to next week (in
Japan), so investors may not build large positions this week,
and worries about Europe are souring the mood," said Kenichi
Hirano, a strategist at Tachibana Securities.
    GS Yuasa Corp, which makes lithium-ion batteries
for Boeing Co's 787 Dreamliner jet and for some
automakers, tumbled 12 percent after Mitsubishi Motors Corp
 said a lithium-ion battery in its plug-in hybrid
Outlander vehicle overheated last week. The automaker shed 4.9
    The broader Topix index dropped 1.5 percent to
    Next week, the Bank Of Japan's quarterly tankan survey of
corporate sentiment is due out on Monday, while the central
bank's first policy meeting under its new leadership will be
held April 3-4.
    BOJ Governor Haruhiko Kuroda said in the upper house of
parliament on Thursday that the central bank would consider
buying longer-dated Japanese government bonds and other risk
assets in a balanced way and would continue monetary easing
until the 2 percent inflation taget is achieved.
    On Wednesday, people familiar with the BOJ's thinking told
Reuters that the central bank was likely to start open-ended
asset purchases immediately rather than in 2014 and consider
setting a new target to buy longer-dated bonds at next week's
    Analysts said stocks were expected to rise again after new
funds flow in to the market as the new fiscal year starts on
April 1, adding that domestic institutional investors may remain
sellers until Friday, the last day of trade this fiscal year.
    "Investors are adjusting their positions as the Nikkei has
gained sharply in a short period of time," said Nobuhiko
Kuramochi, a strategist at Mizuho Securities.
    The Nikkei has gained 18 percent this year on Prime Minister
Shinzo Abe's bold monetary and expansionary policies, lifting
exporters and such reflationary stocks as banks and real estate
stocks. During the term, the benchmark S&P 500 has gained
9.6 percent, the Dow Jones industrial average has added
11 percent and the FTSEurofirst 300 index has advanced
4.4 percent.
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