June 25, 2013 / 6:51 AM / 6 years ago

Nikkei falls below 13,000 in volatile trade on China concerns

* Nikkei ends day down 0.7 pct
    * Falls in Chinese shares add to worries
    * Some exporters up, China-related stocks underperform
    * Fed tapering still pressuring market - analyst

    By Ayai Tomisawa
    TOKYO, June 25 (Reuters) - Japan's Nikkei share average fell
below 13,000 in volatile trade on Tuesday as worry about
stresses in China's banking system added to concerns about the
U.S. Federal Reserve's plan to scale back its stimulus.
    The Nikkei dropped 0.7 percent to 12,969.34 after
rising as much as 1.3 percent and falling 2.3 percent at one
point.
    Analysts say futures selling kicked in after Chinese shares
sank deeper into bear market territory, extending their sharp
declines from the previous day.
    "Investors started worrying about how U.S. and European
markets would react to drops in China, and they rushed to sell,"
said Naoki Fujiwara, a fund manager at Shinkin Asset Management.
    Manufacturers with high exposure to China were under
pressure, with Komatsu Ltd falling 3.8 percent, Hitachi
Construction Machinery Co 2.7 percent and Nissan Motor
Co 1.1 percent.
    A recent spike in inter-bank borrowing costs has raised
fears that strains in China's banking system could weigh on
already slowing growth. This has roiled global markets, which
are already grappling with the Fed's plan to scale back its
stimulus. 
    Market observers said that volatility may persist this week,
while the Nikkei is expected to hover around 13,000.
    "Even though some foreign investors want to reduce their
positions in Japanese stocks, there are people who want to keep
the Nikkei above the 13,000 level at the same time, and that's
keeping the market volatile," said Norihiro Fujito, senior
investment strategist at Mitsubishi UFJ Morgan Stanley
Securities.
    Some exporters gained on Tuesday as the dollar traded above
98 yen.
    Sony Corp was up 0.4 percent, TDK Corp 
gained 1.6 percent and Olympus Corp rose 1.0 percent.
    The Topix dropped 1.0 percent to 1,078.66.
    The benchmark Nikkei has dropped 19 percent since reaching a
5-1/2-year high on May 23, hurt by slowing growth in China,
fears of a pullback in the Fed's stimulus and disappointment
over the Japanese government's recently unveiled growth
strategy.
    The index is still up 25 percent this year, helped by Prime
Minister Shinzo Abe's sweeping fiscal and monetary expansionary
policies aimed at pulling the world's third-biggest economy out
of a two-decade long slump.
    "There are few negative factors in the domestic market, but 
global worries are keeping investors from taking positions,"
Kenichi Hirano, a strategist at Tachibana Securities said.
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